FAIR DEBT COLLECTION PRACTICES ACT -- 2004

DANIEL A. EDELMAN
February 10, 2004

I. INTRODUCTION

This article provides an overview of recent developments concerning the

application of the Fair Debt Collection Practices Act, 15 U.S.C. §1692 et seq. ("FDCPA").

The statute regulates the conduct of "debt collectors" in collecting "debts" owed
or allegedly owed by "consumers." It is designed to protect consumers from unscrupulous
collectors, whether or not there is a valid debt. The FDCPA broadly prohibits unfair or
unconscionable collection methods; conduct which harasses, oppresses or abuses any debtor; and
any false, deceptive or misleading statements, in connection with the collection of a debt; it also
requires debt collectors to give debtors certain information. 15 U.S.C. §§1692d, 1692e, 1692f
and 1692g.

In enacting the FDCPA, Congress recognized the "universal agreement among

scholars, law enforcement officials, and even debt collectors that the number of persons who
willfully refuse to pay just debts is minuscule [sic] ... [T]he vast majority of consumers who
obtain credit fully intend to repay their debts. When default occurs, it is nearly always due to an
unforeseen event such as unemployment, overextension, serious illness, or marital difficulties or
divorce." S. Rep. No. 382, 95th Cong., 1st Sess., p. 3 (1977), reprinted in 1977 U.S.C.C.A.N.
1695, 1697.

The FDCPA is liberally construed in favor of the consumer to effectuate its

purposes. Cirkot v. Diversified Financial Systems, Inc., 839 F.Supp. 941, 944 (D. Conn. 1993);
Johnson v. Riddle, 305 F.3d 1107, 1117 (10th Cir. 2002).

Statutory damages are recoverable for violations, whether or not the consumer
proves actual damages.

I. STATUTORY COVERAGE AND DEFINITIONS

A. WHAT IS A "DEBT"

"Debt" is defined as "any obligation or alle ged obligation of a consumer to pay

money arising out of a transaction in which the money, property, insurance or services which are
the subject of the transaction are primarily for personal, family, or household purposes, whether
or not such obligation has been reduced to judgment." 15 U.S.C. §1692a(5) (emphasis added).

Business and agricultural loans are therefore not "debts" covered by the FDCPA.
Bloom v. I.C. System, Inc., 972 F.2d 1067 (9th Cir. 1992) (business loan); Munk v. Federal Land
Bank, 791 F.2d 130 (10th Cir. 1986) (agricultural loan); Kicken v. Valentine Production Credit

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Ass'n, 628 F. Supp. 1008 (D. Neb. 1984), aff'd mem., 754 F.2d 378 (8th Cir. 1984)(agricultural
loan).

A personal guaranty of a business loan is also not covered. Ranck v. Fulton

Bank, 93-1512, 1994 U.S. Dist. LEXIS 1402, 1994 WL 37744 (E.D. Pa. 1994).
It is now settled that dishonored checks are covered. Bass v. Stolper, Koritzinsky,
Brewster & Neider, S.C., 111 F.3d 1322 (7th Cir. 1997); Ryan v. Wexler & Wexler, 113 F.3d
400 (7th Cir. 1997); Charles v. Lundgren & Associates, P.C., 119 F.3d 739 (9th Cir. 1997);
Duffy v. Landberg, 133 F.3d 1120 (8th Cir. 1998); Snow v. Riddle, 143 F.3d 1350 (10th Cir.
1998); Hawthorne v. MAC Adjustment, Inc., 140 F.3d 1367 (11th Cir. 1998). Check guaranty
companies are statutory "debt collectors" because the check was in default at the time it was
acquired by the guaranty company. Ballard v. Equifax Services, Inc., 27 F.Supp.2d 1201
(E.D.Cal. 1998); Holmes v. Telecredit Services Corp., 736 F.Supp. 1289, 1291-94 (D.Del.
1996); Winterstein v. CrossCheck, Inc., 149 F.Supp.2d 466 (N.D.Ill. 2001).

The statutory liability of a prior endorser on a check which is deposited or cashed

and returned for insufficient funds may not be a "debt," if there is no purchase of goods or
services for consumer purposes. Perez v. Slutsky, 94 C 6137, 1994 U.S.Dist. LEXIS 17711,
1994 WL 698519 (N.D.Ill. 1994). However, Perez was rejected in Byes v. Telecheck Recovery
Serv., 94-3182, 1997 WL 736692, 1997 U.S. Dist. LEXIS 18892 (E.D.La., Nov. 24, 1997).

Condominium and homeowners’ association assessments are FDCPA debts.

Newman v. Boehm, Pearlstein & Bright, 119 F.3d 477 (7th Cir. 1997); Ladick v. Van Gemert,
146 F.3d 1205 (10th Cir. 1998); Thies v. Law Offices of William A. Wyman, 969 F. Supp. 604
(S.D.Cal. 1997); Taylor v. Mount Oak Manor Homeowners Ass'n, 11 F.Supp.2d 753 (D.Md.
1998); Garner v. Kansas, 98-1274, 1999 WL 262100, 1999 U.S. Dist. LEXIS 6430 (E.D.La.,
Apr. 30, 1999).

Rent for a residential apartment is a “debt” covered by the FDCPA. Romea v.

Heiberger & Associates, 163 F.3d 111 (2d Cir. 1998); Wright v. BOGS Management, Inc., 98 C
2788, 2000 WL 1774086, *17 (N.D.Ill., Dec. 1, 2000). The statutory notice in a summary
eviction action, if given by a debt collector, is subject to the FDCPA, regardless of whether the
landlord seeks back rent or merely to evict for nonpayment. The landlord or a management
company that accepts payments that are not late is not a debt collector. However, the failure of
a five-day notice to comply with the FDCPA does not invalidate it; it merely gives rise to a claim
against the debt collector. Dearie v. Hunter, 183 Misc.2d 336, 705 N.Y.S.2d 519 (App. T. 1st
Dept. 2000).

Tort claims by a third party with which the consumer has no contractual
relationship are not covered. Hawthorne v. MAC Adjustment, Inc., 140 F.3d 1367 (11th Cir.
1998). However, in Brown v. Budget Rent-A-Car Systems, Inc.,119 F.3d 922 (11th Cir. 1997),
the Eleventh Circuit held that a claim by a car rental company against a consumer renter for
property damage to the rented vehicle was covered by the FDCPA. Other courts have held that
the FDCPA does not apply to claims for statutory damages for shoplifting, Shorts v. Palmer, 155
F.R.D. 172 (S.D.Ohio 1994), and
claims arising from the illegal reception of microwave television signals. are also not within the
definition of "debt". Zimmerman v. H.B.O. Affiliate Group, 834 F.2d 1163 (3d Cir. 1987).

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 An Eastern District of Pennsylvania decision rejected a debt collector's contention
that a medical bill was not a "debt" because it should have been paid by the patient's insurance
carrier. Adams v. Law Offices of Stuckert & Yates, 926 F.Supp. 521, 526 (E.D.Pa. 1996): "Mr.
Adams was the party ultimately liable for retiring the debt. Whether he retires the debt with
funds from his checking account or pursuant to his contract with a health insurance carrier is of
no moment."

Liabilities for taxes are not considered "debts" within the FDCPA. Staub v.
Harris, 626 F.2d 275 (3d Cir. 1980); Coretti v. Lefkowitz, 965 F. Supp. 3 (D. Conn. 1997);
Beggs v. Rossi, 1997 U.S. Dist. LEXIS 21742 (D. Conn. 1997), aff'd, 145 F.3d 511 (2d Cir.
1998); Berman v. GC Services, LP, 97 C 489, 1997 WL 392209, 1997 U.S.Dist. LEXIS 9558
(N.D. Ill. June 30, 1997), aff'd, 146 F.3d 482 (7th Cir. 1998) (taxes are not covered even if they
are imposed on the basis of a "transaction"). A fine for failing to return a library book is not a
debt. Riebe v. Juergensmeyer & Assoc., 979 F.Supp. 1218 (N.D. Ill. 1997). However, charges
for water and sewer service originally owed to a municipality and purchased by a buyer of bad
debts were "debts" subject to the FDCPA, although property tax obligations are not. Pollice v.
National Tax Funding, LP, 225 F.3d 379 (3rd Cir. 2000).

Liabilities for child support obligations are not considered "debts" within the
FDCPA. Mabe v. GC Services, L.P., 32 F.3d 86 (4th Cir. 1994); Battye v. Child Support Servs.,
873 F. Supp. 103 (N.D.Ill. 1994); Brown v. Child Support Advocates, 878 F. Supp. 1451
(D.Utah. 1994); Jones v. U.S. Child Support Recovery, , 961 F.Supp. 1518 (D.Utah 1997).

A. WHO IS A “DEBT COLLECTOR”

Generally, the FDCPA covers the activities of a "debt collector." There is a two-
part definition of "debt collector": "any person [1] who uses any instrumentality of interstate
commerce or the mails in any business the principal purpose of which is the collection of any
debts, or [2] who regularly collect or attempts to collect, directly or indirectly, debts owed or due
or asserted to be owed or due another. 15 U.S.C. §1692a(6). The creditor itself is excluded from
the definition of "debt collector", unless it uses a name which suggests that a third-party debt
collector is involved in the collection process.

Also excluded from the definition of "debt collector" are the following:

_ Officers and employees of the creditor while collecting the debt in the
creditor's name.
_
_ Affiliates of the creditor. Section 1692a(6)(B) creates an exemption for
"any person while acting as a debt collector for another person, both of whom are related by
common ownership or affiliated by corporate control, if the person acting as a debt collector does
so only for persons to whom it is so related or affiliated and if the principal business of such
person is not the collection of debts." There is no requirement that the affiliate identify itself as
an affiliate of the creditor. Aubert v. American General, 137 F.3d 976 (7th Cir. 1998).
_
_ Officers or employees of the United States or any state. Private debt

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collectors collecting student loans and other obligations which meet the definition of a "debt"
and were originally owed to a governmental unit do not qualify for this exemption. Brannan v.
United Student Aid Funds, Inc., 94 F.3d 1260 (9th Cir. 1996); Jones v. Intuition, Inc. 12 F.Supp.
2d 775 (W.D. Tenn. 1998). However, in Davis v. United Student Aid Funds, 45 F.Supp. 2d
1104 (D. Kans. 1998) the court held that the guaranty agency itself is covered by the fiduciary
exception.
_
_ Process servers. This exemption does not extend to the person who hired
the process server. Romea v. Heiberger & Associates, 163 F.3d 111, 117 (2d Cir. 1998); Alger
v. Ganick, O’Brien & Sarin, 35 F.Supp.2d 148, 153 (D.Mass. 1999).
_
_ Bona fide non-profit debt counselors.
_
_ Persons who service debts which are not in default (e.g., services of
mortgages and student loans). Perry v. Stewart Title Co., 756 F.2d 1197 (5th Cir. 1985);
Coppola v. Connecticut Student Loan Found., Civ. A. N-87-398(JAC), 1989 WL 47419, 1989
U.S. Dist. LEXIS 3415 (D.Conn. March 22, 1989). This exemption does not operate in favor of
such entities when they acquire a loan after default. Brannan v. United Student Aid Funds, Inc.,
94 F.3d 1260, (9th Cir. 1996)("The FDCPA does not provide an exemption for guaranty agencies
that acquire a student loan after default in order to pursue its collection"); Student Loan Fund of
Idaho, Inc. v. Duerner, 131 Idaho 45, 951 P.2d 1272 (1997). However, where a loan is
restructured and the restructured loan is not in default, the fact that the loan was in default prior
to being restructured does not make entities purchasing or servicing the loan FDCPA debt
collectors. Bailey v. Security National Servicing Corp., 154 F.3d 384 (7th Cir. 1998).
_
_ “[A]ny person collecting or attempting to collect any debt owed or due or
asserted to be owed or due another to the extent such activity . . . is incidental to a bona fide
fiduciary obligation or a bona fide escrow arrangement . . . ." The fiduciary relationship must
exist for purposes other than debt collection. Thus, a receiver or trustee of a corporate creditor or
the personal representative or trustee of an individual creditor are treated as if they were the
original creditor. The fact that a collection attorney or agency is the agent, and therefore the
fiduciary, of the creditor does not give rise to an exemption.
_
_ Persons who collect debts "originated by such person[s]". 15 U.S.C.
§1692a(6)(ii). An "originator" is one who played a significant role in originating the obligation.
Buckman v. American Bankers Ins. Co., 115 F.3d 892 (11th Cir. 1997), aff'g 924 F.Supp. 1156
(S.D. Fla. 1996).
_
_ A secured party who takes possession of the creditor's receivables by
enforcing its security interest. That is, if consumer lender ABC pledges its consumer receivables
to commercial lender XYZ and XYZ, pursuant to its rights under the security agreement, directs
the consumer to pay XYZ, XYZ is not a "debt collector".
_
_ Creditors: Creditors may become "debt collectors" by using names in collecting
their debts which falsely suggest the involvement of third party debt collectors or attorneys. The
simplest situation covered by the "other name" exception of §1692a(6) is that where creditor
ABC sends its debtors letters which demand payment in the name of XYZ Collection Agency,

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XYZ either being a totally fictitious entity or a real entity which has no significant involvement
in the actual collection of ABC's debts. On its face, such conduct makes ABC a "debt collector"
under §1692a(6) and simultaneously violates the prohibition against deceptive collection
practices, §1692e. Numerous pre-FDCPA cases held that this practice violated §5 of the FTC
Act. Wm. M. Wise Co. v. FTC., 246 F.2d 702 (D.C. Cir. 1957); In re Teitelbaum, 49 FTC 745
(1953); In re Bureau of Engraving, Inc., 39 FTC 192 (1944); In re National Remedy Co., 8 FTC
437 (1925); In re B.W. Cooke, 9 FTC 283 (1925); In re U.S. Pencil Co., 49 FTC 734 (1953); In
re Perpetual Encyclopedia Corp. 16 FTC 443 (1932).
_
_ The FTC has stated that a creditor is using a name "other than [the creditor's]
own" if the creditor is using a name which on its face it "would indicate that a third person is
collecting or attempting to collect [the creditor's] debts" and no disclosure is made of the
relationship between the name used in dealing with the consumer prior to default and the name
used in attempting to collect after default, even if the creditor lawfully owns the name used to
make collection. Sept. 19, 1985 opinion letter. The FTC commentary on the FDCPA states:
_
Creditors are generally excluded from the definition of "debt collector" to the
extent that they collect their own debts in their own name. However the term
specifically applies to "any creditor who, in the process of collecting his own
debts, uses any name other than his own which would indicate that a third person
is" involved in the collection.

A creditor is a debt collector for purposes of this act if:

o He uses a name other than his own to collect his debts, including a
fictitious name.

o His salaried attorney employees who collect debts use stationery that
indicated that attorneys are employed by someone other than the creditor
or are independent or separate from the creditor [the same should apply to
salaried nonattorney employees, as herein]. . . .

o The creditor's collection division or related corporate collector is not

clearly designated as being affiliated with the creditor; however, the
creditor is not a debt collector if the creditor's correspondence is clearly
labeled as being from the "collection unit of the (creditor's name)," since
the creditor is not using a "name other than his own" in that instance.
(Emphasis added.)

In Maguire v. Citicorp Retail Services, Inc., 147 F.3d 232 (2nd Cir. 1998), the
Second Circuit reversed a summary judgment for the defendant in a case where Citicorp Retail
Services sent out letters under the letterhead of "Debtor Assistance" to collect private label credit
card debts.

"[T]he scope of creditor liability under §1692a(6) goes beyond the creditor's use
of aliases or pseudonyms to instances where the creditor merely implies that a third party is
collecting a debt when in fact it is the creditor that is attempting to do so." Larson v. Evanston

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Northwestern Healthcare Corp. , 98 C 5, 1999 WL 518901, 1999 U.S. Dist. LEXIS 11380 (N.D.
Ill. July 20, 1999).

A creditor collects its own debts by using a different name, implying that a third
party was the debt collector, either (a) when the creditor uses an alias, or (b) when the creditor
controls all aspects of the collection effort. E.g., Sokolski v. Trans Union Corp., 53 F.Supp. 2d
307, 312 (E.D.N.Y. 1999); Flamm v. Sarner & Associates, P.C., 02-4302, 2002 WL 31618443
(E.D.Pa., Nov. 6, 2002).

Bad debt buyers : Recently, it has become common for banks, credit card
companies and other creditors to sell their delinquent debts to companies which specialize in the
purchase and liquidation of bad debts."Respectability at Last for Buyers and Sellers of Bad
Debt," Credit Risk Management Report, March 23, 1998, v. 8, no. 5; J. Lynn, Update: Bad Debt
Business Thriving, Commercial Law Bulletin, March 1, 1998, v. 13, no. 2, pp. 6-7.

A financial institution which purchases delinquent debts is a "debt collector"

within the meaning of the FDCPA with respect to the delinquent debts. Schlosser v. Fairbanks
Capital Corp., 323 F.3d 534 (7th Cir. 2003); Kimber v. Federal Financial Corp., 668 F.Supp.
1480 (M.D.Ala. 1987); Cirkot v. Diversified Systems, 839 F.Supp. 941 (D.Conn. 1993); Ruble
v. Madison Capital, Inc., C-1-96-1693, 1998 U.S.Dist. LEXIS 4926 (N.D.Ohio 1998); Holmes
v. Telecredit Service Corp., 736 F.Supp. 1289, 1292 (D.Del. 1990); Farber v. NP Funding II, LP,
96 CV 4322, 1997 WL 913335, 1997 U.S.Dist. LEXIS 21245 (E.D.N.Y. Dec. 9, 1997); Stepney
v. Outsourcing Solutions, Inc., 1997 U.S.Dist. LEXIS 18264 (N.D.Ill. 1997); Coppola v.
Connecticut Student Loan Found., Civ. A. N-87-398(JAC), 1989 WL 47419, 1989 U.S. Dist.
LEXIS 3415 (D.Conn. March 22, 1989); Wagner v. American Nat'l Educ. Corp., Civ. No. N-81-
541 (PCD), 1983 U.S.Dist. LEXIS 10287 (D.Conn. Dec. 30, 1983) ("The statute permits service
debt collection free of the act if, when the debt was acquired, it was not in default");
Commercial Service of Perry v. Fitzgerald, 856 P.2d 58, 62 (Colo.App. 1993) ("[A] company
which takes an assignment of a debt in default, and is a business the principal purpose of which
is to collect debts, may be subject to the Act, even if the assignment is permanent and without
any further rights in the assignor"). As long as the purchaser asserts that the debt was in default
when acquired, the FDCPA applies, even if the assertion proves to be false. Schlosser v.
Fairbanks Capital Corp., 323 F.3d 534 (7th Cir. 2003)

"The legislative history of section 1692a(6) [which defines 'debt collector']

indicates conclusively that a debt collector does not include . . . an assignee of a debt, as long as
the debt was not in default at the time it was assigned." Perry v. Stewart Title Co., 756 F.2d
1197, 1208 (5th Cir. 1985), citing S. Rep. No. 95-382, 95th Cong., 1st Sess. 3, reprinted in 1977
USCCAN 1695, 1698. Conversely, the assignee of a debt which is in default at the time of the
assignment is a "debt collector," if the assignee's principal purpose is the collection of debts, or
the assignee regularly engages in the collection of debts. "For instance, a mortgage servicing
company is not considered a debt collector when it acquires loans originated by others and not in
default at the time acquired. However, to the extent the mortgage servicing company receives
delinquent accounts for collection it is a debt collector with respect to those accounts." Games v.
Cavazos, 737 F.Supp. 1368, 1384 (D.Del. 1990).

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 The successor in interest to a creditor's business or line of business, which became
such through corporate changes and is openly identified as such, has been held not to be a "debt
collector." Guest v. Capital One Financial Services, D. Ct., Conn. Law Tribune, Nov. 18, 1996.

Lawyers : Lawyers were originally excluded from the definition of "debt

collector." In 1986, Congress removed the attorney exemption. See P.L. 99-361, 100 Stat. 768,
deleting former 15 U.S.C. §1692a(6)(F), which excluded from the definition of "debt collector"
"any attorney-at- law collecting a debt as an attorney on behalf of and in the name of a client."

Now, the "FDCPA does apply to a lawyer . . . with a general practice including a
minor but regular practice in debt collection." Crossley v. Lieberman, 90 B.R. 682, 694
(E.D.Pa. 1988), aff'd, 868 F.2d 566 (3d Cir. 1989). The legislative history of the amendment
states that collection attorneys were not being effectively policed by the legal profession and
courts, and that the removal of the exemption was necessary to "put a stop to the abusive and
harassing tactics of attorney debt collectors." 1986 USCCAN 1756-57.

In Heintz v. Jenkins, 514 U.S. 291 (1995), the United States Supreme Court held
that litigation conduct of attorneys in collecting consumer debts is not exempt from the FDCPA,
rejecting the arguments of the collection bar to the contrary. Unlawful conduct by collection
attorneys in court proceedings is now covered, assuming that there is no Rooker-Feldman or res
judicata bar. Watkins v. Peterson Enterprises, Inc., 57 F.Supp.2d 1102 (E.D.Wash. 1999)
(unauthorized costs in connection with state court garnishments). However, some judges are
nevertheless still reluctant to find violations based on the contents of pleadings. Argentieri v.
Fisher Landscapes, Inc., 15 F.Supp.2d 55 (D. Mass. 1998). The court retreated from this
position on a motion to reconsider, stating that "I do not suggest here that claims filed in court
could not, if intended to harass a debtor, be actionable under the FDCPA." Argentieri v. Fisher
Landscapes, Inc., 27 F.Supp.2d 84 (D. Mass. 1998). Contra, Strange v. Wexler, 796 F.Supp.
1117, 1118 (N.D. Ill. 1992).

The amount of collection activity necessary to make a lawyer a "debt collector" --

one who "regularly" collects consumer debts -- is minimal. A law firm's debt collection work
which amounted to less than 4% of its total business brought it within the definition. "While the
ratio of debt collection to other efforts may be small, the actual volume is sufficient to bring
defendant under the Act's definition of 'debt collector.'" Stojanovski v. Strobl & Manoogian,
P.C., 783 F.Supp. 319, 322 (E.D.Mich. 1992). An attorney who represented four collection
agencies, filed over 150 collection suits in a two-year period, and sent one particular collection
letter over 125 times in a 14- month period was a debt collector even though debt collection was
merely incidental to his primary law practice. Cacace v. Lucas, 775 F.Supp. 502 (D.Conn.
1990). Another decision holds that sending 60 collection letters during a period of several
weeks is sufficient. Tragianese v. Blackmon, 993 F.Supp. 96 (D. Conn. 1997). On the other
hand, an attorney who collected less than 20 consumer debts in a 10-year period was not a debt
collector. Mertes v. Devitt, 734 F.Supp. 872 (W.D.Wis. 1990).

In two questionable decisions, courts held that a nascent collection lawyer who
sent out about two dozen or three dozen letters at one time was not engaged in regular debt
collection. Mladenovich v. Cannonito, 97 C 4729, 1998 WL 42281,1998 U.S. Dist. LEXIS 985
(N.D. Ill., Jan. 29, 1998) (two dozen); White v. Simonson & Cohen, 23 F.Supp.2d 273

7
(E.D.N.Y., 1998) (35 letters sent on one occasion not enough).

A lawyer should be classified as a "debt collector" if either a volume threshold or

a percentage-of-time thresho ld is met, or if the lawyer holds himself out as engaging in consumer
debt collection. A volume threshold is necessary because a law firm that handles a modest
number of consumer collection matters as part of providing a full range of services to its clients
should be required to comply with the FDCPA. One court has held that "It is the volume of the
attorney's debt collection efforts that is dispositive, not the percentage such efforts amount to in
the attorney's practice." Stojanovski v. Strobl & Manoogian, P.C., 783 F.Supp. 319, 322
(E.D.Mich. 1992), citing Cacace v. Lucas, 775 F.Supp. 502, 504 (D.Conn. 1990); In re Littles,
90 Bankr. 669, 676 (Bankr. E.D. Pa. 1988), aff'd as modified sub nom., Crossley v. Lieberman,
90 Bankr. 682 (E.D. Pa. 1988), aff'd, 868 F.2d 566 (3d Cir. 1989). But see Hartl v. Presbrey &
Assoc., 95 C 4728, 1996 WL 529339, 1996 U.S.Dist. LEXIS 13419 (N.D.Ill., Sep. 16, 1996);
Nance v. Petty, Livingston, Dawson & Devening, 881 F.Supp. 223 (W.D.Va. 1994). The Fifth
Circuit has held that a law firm that sent out 600 demand letters was a "debt collector"
notwithstanding the fact that only a small fraction of its time was spent in that activity. Garrett
v. Derbes, 110 F.3d 317 (5th Cir. 1997).

A percentage threshold and a "hold ing out" test are also necessary because the
FDCPA should apply to (i) a lawyer with a nascent collection practice and (ii) a lawyer who
attempts to obtain collection business, even if he is not successful in obtaining very much of it.

Mass mailers : Several recent decisions held that companies which provide debt
collectors with the service of generating and mailing large numbers of form letters, but do not
participate in the composition of the letters and are not compensated based on the amounts
received, are not debt collectors. Trull v. Lason Systems, 982 F.Supp. 600 (N.D. Ill. 1997);
Laubach v. Arrow Service Bureau, 987 F.Supp. 625 (N.D. Ill. 1997); Lockemy v.
Comprehensive Collection Servs., 97 C 1180, 1998 WL 832655, 1998 U.S. Dist. LEXIS 18887
(N.D.Ill., Nov. 20, 1998). A related decision held that Western Union is not a "debt collector"
where all it does is transmit a collection message. Aquino v. Credit Control Services, 4
F.Supp.2d 927 (N.D.Cal. 1998). However, the Ninth Circuit has held that Western Union could
be a "debt collector" as a result of furnishing its "Automated Voice Telegram" service. Romine
v. Diversified Collection Services, 155 F.3d 1142 (9th Cir. 1998).

Creditors that use mass mailers : It should follow from the last point that where
a creditor hires a company that merely mails letters without further collection activity, or
otherwise engages in conduct not sufficient to make it a debt collector, and the name of the
mailer or another third party is used on the mailings, the creditor is both (a) making itself a debt
collector under the §1692a(6) proviso and (b) engaging in deceptive collection efforts in
violation of §1692e.
Repossessors : Repossession agencies are not debt collectors within the FDCPA
unless they perform common collection services, such as sending dunning letters, making
telephone calls, etc. Jordan v. Kent Recovery Servs., 731 F.Supp. 652 (D.Del. 1990); Larranaga
v. Mile High Collection and Recovery Bureau, Inc., 807 F.Supp. 111 (D.N.M. 1992); Colton v.
Ford Motor Credit Co., 1986 Ohio App. LEXIS 7797, 1986 WL 8538 (Ohio App., July 30,
1986). The fact that the repossessed property is sold and applied to the debt is not enough.
Tucker v. RAW Recovery, Inc., 1998 U.S. Dist. LEXIS 20162 (M.D.N.C. Oct. 28, 1998). An

8
unusual Seventh Circuit decision holds that the imposition of a modest fee ($25) by a repossessor
does not violate the FDCPA. Nadalin v. Automobile Recovery Bur., Inc., 169 F.3d 1084 (7th
Cir. 1999).

A. WHAT IS A “COMMUNICATION”

Certain important substantive prohibitions of the FDCPA apply to

"communications." These include §§1692c and several subdivisions of 1692e. A
"communication" is defined as "the conveying of information regarding a debt directly or
indirectly to any person through any medium." 15 U.S.C. §1692a(2). Usually this takes the
form of dunning letters or telephone calls. However, the term is broadly and literally construed
to encompass other forms of conveying information as well. Tolentino v. Friedman, 833 F.Supp.
697 (N.D.Ill. 1993), aff'd in part and rev'd in part, 46 F.3d 645 (7th Cir. 1995) (debt collector
sent consumers a copy of the summons and complaint prior to service accompanied by an
"IMPORTANT NOTICE" discussing the consequences of filing bankruptcy).

The fact that a communication is sent to the consumer’s attorney does not
preclude it from being a communication. Rosario v. American Corrective Counseling Services,
2:01-CV-221, 2001 WL 1045585 (M.D.Fla. Aug. 27, 2001).

WHO IS ENTITLED TO SUE

The FDCPA applies to "consumer" debts, and certain substantive provisions, e.g.,
§1692c, only protect "consumers." A "consumer" is "any natural person obligated or allegedly
obligated to pay any debt." 15 U.S.C. §1692a(3). The consumer's executrix has standing to bring
an FDCPA action. Wright v. Finance Service of Norwalk, Inc., 22 F.3d 647 (6th Cir. 1994) (en
banc); Riveria v. MAB Collections, Inc., 682 F.Supp. 174 (W.D.N.Y. 1988).

It should be noted that certain substantive protections of the FDCPA are not
limited to "consumers," e.g., §1692e. West v. Costen, 558 F.Supp. 564 (W.D.Va. 1983);
Villareal v. Snow, 95 C 2484, 1996 WL 28254, 1996 WL 28282, 1996 U.S. Dist. LEXIS 667, *6
(N.D.Ill. Jan. 19, 1996); Whatley v. Universal Collection Bureau, 525 F.Supp. 1204, 1205-6
(N.D.Ga. 1981). Persons who do not in fact owe money but who are subjected to improper
practices by debt collectors are entitled to the protection of the FDCPA. Dutton v. Wolhar, 809
F.Supp. 1130, 1134-5 (D.Del. 1992); Flowers v. Accelerated Bureau of Collections, 96 C 4003,
1997 U.S.Dist. LEXIS 3354, 1997 WL 136313 (N.D.Ill. Mar 19, 1997), later opinion, 1997 WL
224987, 1997 U.S. Dist. LEXIS 6070 (N.D. Ill. Apr. 30, 1997); Riveria v. MAB Collections,
Inc., 682 F.Supp. 174, 175 (W.D.N.Y. 1988) ("any person who comes in contact with proscribed
debt collection practices may bring a claim").
I. VIOLATIONS

LEAST SOPHISTICATED OR
UNSOPHISTICATED CONSUMER STANDARD

Most courts have held that whether a communication or other conduct

violates the FDCPA is to be determined by analyzing it from the perspective of the "least
sophisticated debtor." Clomon v. Jackson, 988 F.2d 1314 (2d Cir. 1993); Taylor v.

9
 Perrin, Landry, de Launay & Durand, 103 F.3d 1232 (5th Cir. 1997); Graziano v.
Harrison, 950 F.2d 107, 111 (3d Cir. 1991); Smith v. Transworld Systems, Inc., 953 F.2d
1025, 1028-29 (6th Cir. 1992); Swanson v. Southern Oregon Credit Service, Inc., 869
F.2d 1222, 1225-26 (9th Cir. 1988); Jeter v. Credit Bureau, Inc., 760 F.2d 1168 (11th Cir.
1985); Russey v. Rankin, 911 F. Supp. 1449 (D.N.M. 1995); Bukumirovich v. Credit
Bureau of Baton Rouge, Inc., 155 F.R.D. 146 (M.D.La. 1994); United States v. National
Financial Servs., 820 F. Supp. 228, 232 (D.Md. 1993), aff'd, 98 F.3d 131, 135, 1996
U.S.App. LEXIS 26645 (4th Cir. 1996); Moore v. Ingram & Assocs., 805 F. Supp. 7
(D.S.C. 1992). "The basic purpose of the least-sophisticated-consumer standard is to
ensure that the FDCPA protects all consumers, the gullible as well as the shrewd."
Clomon, supra.

The Seventh Circuit has held that a violation should be determined from
the perspective of the "unsophisticated consumer." Gammon v. GC Services L.P., 27
F.3d 1254 (7th Cir. 1994) Since the "least sophisticated consumer" has never been
interpreted to impose liability for bizarre or idiosyncratic interpretations of collection
demands, it does not appear that the difference in language represents a significant
difference in substance. This was confirmed by a later Seventh Circuit decision, Avila v.
Rubin, 84 F.3d 222 (7th Cir. 1996).

The Fifth Circuit, perceiving no substantial difference between the two

standards, has declined to select between them. McKenzie v. E.A. Uffman & Assoc.,
Inc.,119 F.3d 358 (5th Cir. 1997).

It is not necessary to show that the plaintiff was actually misled by a

collection notice. Avila v. Rubin, 84 F.3d at 227 (7th Cir. 1996); Bartlett v. Heibl, 128
F.3d 497 (7th Cir. 1997).

Under either the "least sophisticated" or "unsophisticated" consumer

standard, a collection communication which can plausibly be read in two or more ways,
at least one of which is misleading, violates the law. Russell v. Eq uifax A.R.S., 74 F.3d
30 (2d Cir. 1996).

A. VALIDATION OR VERIFICATION NOTICE

One of the most important rights conferred by the FDCPA is the debtor's right to
"validation" or "verification" of a debt under § 1692g. "This provision will eliminate the
recurring problem of debt collectors dunning the wrong person or attempting to collect debts
which the consumer has already paid." Sen.R. No. 95-382, 95th Cong., 1st. Sess., p. 4, reprinted
in 1977 USCCAN 1695, 1698. Under 15 U.S.C. §1692g:
(a) Within five days after the initial communication with a consumer in
connection with the collection of any debt, a debt collector shall, unless the
following information is contained in the initial communication or the consumer
has paid the debt, send the consumer a written notice containing --

(1) the amount of the debt;

10
 (2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of
notice, disputes the validity of the debt, or any portion thereof, the debt
will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing
within the thirty-day period that the debt, or any portion thereof, is
disputed, the debt collector will obtain verification of the debt or a copy of
a judgment against the consumer and a copy of such verification or
judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer's written request within the thirty-day
period, the debt collector will provide the consumer with the name and
address of the original creditor, if different from the current creditor.

15 U.S.C. §1692g(a).

It is sufficient that the collector send the notice; nonreceipt does not amount to a
violation if it was sent. Mahon v. Credit Bur. of Placer County Inc., 171 F.3d 1197 (9th Cir.
1999).

“The statute does not say in so many words that the disclosures required by it
must be made in a nonconfusing manner. But the courts, our own included, have held, plausibly
enough, that it is implicit that the debt collector may not defeat the statute's purpose by making
the required disclosures in a form or within a context in which they are unlikely to be understood
by the unsophisticated debtors who are the particular objects of the statute's solicitude.” Bartlett
v. Heibl, 128 F.3d 497, 500 (7th Cir. 1997)

The debt collector is not precluded from collecting the debt within the validation period.
However, if the debt collector threatens action or demands payment within the validation period
(30 days from receipt), there is a violation unless the collector explains that upon receipt of a
dispute/ request for validation, collection activity will cease until verification is sent. Bartlett v.
Heibl, 128 F.3d 497 (7th Cir. 1997).

If the initial communication to the debtor is a summons and complaint, it must

comply with 1692g. Thomas v. Simpson & Cybak, 354 F.3d 696 (7th Cir. 2004); Sprouse v. City
Credits Co., 126 F.Supp.2d 1083, 1089 n. 8 (S.D.Ohio 2000) (finding that a summons and
complaint served in a state court action constitute "initial communications" under the FDCPA);
Romea v. Heiberger & Associates, 163 F.3d 111 (2d Cir. 1998) (statutory five-day notice is
“communication”); Mendus v. Morgan & Assoc., P.C., 994 P.2d 83 (Okla. App. 1999)(summons
is “communication”); contra, Vega v. McKay, 351 F.3d 1334, 1335 (11th Cir. 2003); McKnight
v. Benitez, 176 F.Supp.2d 1301, 1306-08 (M.D.Fla.2001) (holding that a summons and
complaint do not constitute "initial communications" triggering the debt validation notice
requirements of § 1692g). The requirement in the summons that the defendant answer within 30
days or less will conflict with the validation notice and at least requires the “qualifying
language” of Bartlett v. Heibl, 128 F.3d 497 (7th Cir. 1997). See In re Martinez, 311 F.3d 1272

11
(11th Cir.2002).

Claims may also be brought for false statements in state court pleadings. Collins
v. Sparacio, 03 C 64, 2003 WL 21254256 (N.D.Ill., May 30, 2003).

Section 1692g(b) then provides that if the consumer disputes the debt in writing,
the collector must cease further collection efforts until the validation procedure is complied with:

Disputed debts

(b) If the consumer notifies the debt collector in writing within the thirty-
day period described in subsection (a) of this section that the debt, or any portion
thereof, is disputed, or that the consumer requests the name and address of the
original creditor, the debt collector shall cease collection of the debt, or any
disputed portion thereof, until the debt collector obtains verification of the debt or
a copy of a judgment, or the name and address of the original creditor, and a copy
of such verification or judgment, or name and address of the original creditor, is
mailed to the consumer by the debt collector.

Although the notice literally requires the debt collector to provide validation information, the
Seventh Circuit has held that the debt collector does not violate the statute if it ceases all further
collection activities without providing the information. Jang v. A. M. Miller & Assoc., Inc.,
1996 U.S.Dist. LEXIS 10883 (N.D.Ill., July 30, 1996), aff'd, 122 F.3d 480 (7th Cir. 1997)
("When a collection agency cannot verify a debt, the statute allows the debt collector to cease all
collection activities at that point without incurring any liability for the mistake"); Sambor v.
Omnia Credit Services, Inc., 183 F.Supp.2d 1234, 1242 (D.Haw. 2002); Smith v. Transworld
Systems, Inc., 953 F.2d 1025, 1031-32 (6th Cir. 1992).

The Fourth Circuit has held that "verification of a debt involves nothing more
than the debt collector confirming in writing that the amount being demanded is what the
creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged
debt." Chaudhry v. Gallerizzo, 174 F.3d 394 (4th Cir. 1999); Stonehart v. Rosenthal, 01 Civ.
651, 2001 WL 910771 (S.D.N.Y., Aug. 13, 2001).

Section 1692g(c) provides that “The failure of a consumer to dispute the validity
of a debt under this section may not be construed by any court as an admission of liability by the
consumer.” Under this section, the initial communication from a debt collector cannot be used
as the basis for an account stated. Citibank v. Jones, 184 Misc.2d 63, 706 N.Y.S.2d 301 (Dist.
Ct. 2000).

A. AMOUNT OF THE DEBT

Section 1692g(a)(1) requires the “amount of the debt” to be stated in the initial
letter. This requires the entire amount owed at the time a collection demand is set to be stated.
Miller, v. McCalla, Raymer, Padrick, Cobb, Nichols, and Clark, L.L.C., 214 F.3d 872 (7th Cir.
2000) (not sufficient to state that unpaid principal balance of residential mortgage loan was

12
$178,844.65, and that this did not include unspecified accrued but unpaid interest, unpaid late
charges, escrow advances, and other charges authorized by loan agreement). See also, Veach v.
Sheeks, 316 F.3d 690 (7th Cir. 2003); Schletz v. Academy Collection Service, 02 C 6484, 2003
WL 21196266 (N.D.Ill., May 15, 2003); Taylor v. Cavalry Inv., LLC, 210 F.Supp.2d 1001
(N.D.Ill. 2002); Ingram v. Corporate Receivables, Inc., 02 C 6608, 2003 WL 21018650 (N.D.Ill.,
May 5, 2003); Bernstein v. Howe, IP 02-192-C-K/H, 2003 WL 1702254 (S.D.Ind., March 31,
2003) ($x plus unspecified interest and attorney’s fees violated statute); Bawa v. Bowman,
Heintz, Boscia & Vician, PC, IP 00-1319-C-M/S, 2001 WL 618966 (S.D.Ind., May 30, 2001);
Wilkerson v. Bowman, 200 F.R.D. 605 (N.D.Ill. 2001); Valdez v. Hunt & Henriques, 01-01712
SC, 2002 WL 433595 (N.D.Cal. March 19, 2002); Jackson v. Aman Collection Service, IP 01-
0100-C-T/K, 2001 WL 1708829 (S.D.Ind., Dec. 14, 2001); Sonmore v. Checkrite Recovery
Services, Inc., 187 F.Supp.2d 1128 (D.Minn. 2001); Dechert v. Cadle Co., IP 01-880-C(B/G),
2003 WL 23008969 (S.D.Ind., Sept. 11, 2003); McDowall v. Leschack & Grodensky, P.C., 279
F.Supp.2d 197 (S.D.N.Y. 2003); Armstrong v. Rose Law Firm, P.S., 00-2287, 2002 WL 461705
(D.Minn. March 25, 2002)..

In addition, 15 U.S.C. §1692e(2) prohibits “The false representation of– (A) the
character, amount, or legal status of any debt; or (B) any services rendered or compensation
which may be lawfully received by any debt collector for the collection of a debt.”

A. RELATIONSHIP BETWEEN §§1692g AND 1692e(8)

Cases are divided on whether an oral dispute prevents the collector from assuming
that the debt is valid. Jolly v. Shapiro, 237 F.Supp.2d 888 (N.D.Ill. 2002); Graziano v. Harrison,
950 F.2d 107, 112 (3d Cir. 1991); Sturdevant v. Jolas, 942 F.Supp. 426, 429 (W.D.Wisc. 1996);
Castillo v. Carter, 99-1757, 2001 WL 238121 (S.D.Ind. Feb. 28, 2001) (all requiring writing);
with Spearman v. Tom Wood Pontiac-GMC, Inc., IP 00-1340-C-T/K, 2002 WL 31854892
(S.D.Ind., Nov. 4, 2002) (no writing requirement).

Section 1692g is related to §1692e(8). Under §1692e(8), if a consumer disputes a

debt, either orally or in writing, Brady v. Credit Recovery Co., 160 F.3d 64 (1st. Cir. 1998), the
debt collector cannot report it as undisputed to a credit bureau. Thus, if the consumer orally
disputes the debt, the debt collector cannot assume that the debt is valid or report it as undisputed
to a credit bureau, but need not provide validation information to the debtor.
If the consumer requests a credit bureau to remove a tradeline or note that the debt
is disputed, the furnisher of information, which can be a debt collector, violates the Fair Credit
Reporting Act as well as the FDCPA by verifying or continuing to report it as undisputed.

A. OVERSHADOWING

Under §1692g, is not enough for a debt collector to merely include the notice
somewhere on the collection letter. Bartlett v. Heibl, 128 F.3d 497 (7th Cir. 1997); Riveria v.
MAB Collections, Inc., 682 F.Supp. 174 (W.D.N.Y. 1988). The notice must be large and
prominent enough to be noticed and easily read. Riveria v. MAB Collections, Inc. 682 F.Supp.
174, 177 (W.D.N.Y. 1988); Rabideau v. Management Adjustment Bureau, 805 F.Supp. 1086,
1093 (W.D.N.Y. 1992). The validation notice may not be either "overshadowed" or contradicted
by other language or material in the original or subsequent collection letters sent within 30 days

13
after receipt of the first one. Swanson v. Southern Oregon Credit Service, Inc., supra, 869 F.2d
1222 (9th Cir. 1988); Harris v. Payco General American Credits, Inc., 1998 U.S.Dist. LEXIS
20153 (N.D. Ill. Dec. 9, 1998)."A notice is overshadowing or contradictory if it would make the
least sophisticated consumer uncertain as to her rights." Russell v. Equifax A.R.S., 74 F.3d 30
(2d Cir. 1996).

The Seventh Circuit has held that demands for "immediate" or "urgent" payment
overshadow and contradict the §1692g notice unless a full explanation of the relationship
between the demand and the debtor's validation rights. In Chauncey v. JDR Recovery Corp., 118
F.3d 516 (7th Cir. 1997), the Seventh Circuit held that a letter insisting that the collector receive
a check within 30 days in one paragraph (a demand which would require the debtor to transmit
the check in less than 30 days) followed by the §1692g notice in the next, and concluding with a
demand for a "prompt response" to avoid "further collection activities" violated §1692g. The
text of the letter was as follows:

Dear Carl P. Chauncey,

Please be advised that we have been requested by [Bridgestone/ Firestone] to

assist them in the collection of the amounts due set forth above. Unless we receive
a check or money order for the balance, in full, within thirty (30) days from
receipt of this letter, a decision to pursue other avenues to collect the amount due
will be made.

Unless you notify this office within thirty (30) days after receiving this notice that
you dispute the validity of this debt, or any portion thereof, this office will assume
this debt is valid. If you notify this office in writing within thirty (30) days from
receiving this notice that you dispute the debt or any portion of it, this office will
obtain verification of the debt or obtain a copy of the judgment and mail you a
copy of such judgment or verification. If you request this office in writing within
thirty (30) days after receiving this notice, this office will provide you with the
name and address of the original creditor if different from the current creditor.

This is an attempt to collect on this debt. Any information obtained will be used
for that purpose.

You may contact Ms. Mackenzie at (800) 793-3369 if you have any questions or
if you would like to discuss this matter further.

Please include the above JDR number on the outside of your remittance envelope
to insure proper credit. We trust your prompt response will make any further
collection activities unnecessary. In the event we do not hear from you within the
next thirty (30) days, further collection activities will be pursued to the extent
permitted by law.

The Court of Appeals agreed that "the thirty-day payment requirement set out in
the [first paragraph of the] collection letter contradicts the mandatory validation notice
disclosures allowing thirty days to dispute the debt." It explained:

14
 The statement in the first paragraph of defendant's letter -- "Unless we receive a
check or mo ney order for the balance, in full, within thirty (30) days from receipt
of this letter, a decision to pursue other avenues to collect the amount due will be
made" -- contradicts the language in the letter explaining the plaintiff's validation
rights und er the FDCPA, which allows plaintiff 30 days in which to dispute the
debt and request verification. We believe that the contradictions in the letter, as in
Avila, would leave an unsophisticated consumer confused as to what his rights are
and therefore violate the FDCPA.

Defendant argues that the letter contains no contradiction because plaintiff is

given the same amount of time to pay as to contest the debt (i.e., "within thirty
(30) days"). But the letter required that plaintiff's payment be received within the
30-day period, thus requiring plaintiff to mail the payment prior to the thirtieth
day to comply. In contrast, subparagraphs (3) and (4) of §1692g(a) give the
consumer thirty days after receipt of the notice to dispute the validity of a debt. It
is clear that Mr. Chauncey had the full thirty days to send his notification to
defendant. Nothing in Section 1692g requires, and we have found no other court
decision which has required, that the debt collector must receive notice of the
dispute within thirty days as defendant insists. . . .

In Bartlett v. Heibl, 128 F.3d 497 (7th Cir. 1997). defendants' letter threatened
legal action within the 30-day validation period by demanding that the debtor make payment
within one week or other suitable arrange ments. The letter also contained a paraphrase of §
1692g's language. Even though the letter did not misstate either parties' legal rights, the Seventh
Circuit found that the letter was confusing and violated § 1692g because it contained the
seemingly contradictory statements that the debtor had 30 days to verify his debt and that he
could also be sued in one week.

The Bartlett court concluded, by way of an exemplary "safe harbor" letter, that if
a debt collector threatens suit or demands action of the debtor within the 30-day validation
period, it should also provide the debtor with a full explanation of the relationship between the
creditor's right to sue and the debtor's right to verification, namely, that if the debtor disputes the
debt and requests verification all collection efforts must be halted until verification if provided.
A very similar solution was endorsed by the Second Circuit in Savino v Computer Credit, Inc.,
164 F.3d 81 (2d Cir. 1998).

Debt collectors using the "safe harbor" letter need to adhere to it strictly. The
reference to suit within 30 days may not be used without the explanation that exercise of
verification rights will halt the collection process. Freys v. Satter, Beyer & Spires, 1999
U.S.Dist. LEXIS 6912 (N.D.Ill., April 30, 1999). Also, the reference to 30 days should specify
"after receipt."

In Johnson v. Revenue Mgmt. Corp., 169 F.3d 1057 (7th Cir. 1999). the Seventh
Circuit held that two letters could be found to violate §1692g, if they in fact increased consumer
confusion. Both letters contained a paraphrase of the statutory notice. The letter to Lenora
Johnson added:

15
 If you fail to make prompt payment we will have no alternative but to proceed
with collection, which may include referring this account for legal action or
reporting this delinquency to the credit bureau.

Should you wish to discuss this matter, contact our office and ask for extension
772.
The letter to Brendt Wollert added:

The above account has been placed with our firm for payment in full. Call our
office immediately upon receipt of this letter. Our toll free number is
1-800-521-3236.

The Johnson court stated that survey or similar evidence may be necessary to establish that the
quoted statements in fact increased consumer confusion as to their §1692g rights.

Any language suggesting that action within 30 days is necessary, may create a
§1692g problem. Seplak v. IMBS, Inc., 1999 U.S. Dist. LEXIS 2106 (N.D.Ill. Feb. 23, 1999).
Prior cases to the contrary may be invalid under Bartlett v. Heibl, 128 F.3d 497 (7th Cir. 1997)

In Ozkaya v. Telecheck Services, 982 F. Supp. 578 (N.D. Ill. 1997), the district
court
dealt with a letter which stated:

Telecheck has purchased the check referenced in this notice. As a result, we have
entered your name in our NATIONAL COMPUTER FILES. Until this is
resolved, we may not approve your checks or the opening of a checking account
at over 90,000 merchants and banks who use Telecheck nationally.

We have assigned your file to our Recovery Department where it will be given to
a professional collection agent. Please be aware that we may take reasonable steps
to contact you and secure payment of the balance in full.
In order for us to update your file quickly, send a cashier's check or money order
for the Total Amount Due in the return envelope provided.

It is our intent to resolve this as quickly and as amicably as possible for all parties
concerned. Any delay, or attempt to avoid this debt, may affect your ability to use
checks.

The court held that the demand for "quick" payment coupled with the suggestion that the debtor's
credit could be adversely affected resulted in a valid overshadowing claim:

The Bartlett court's generous definition of overshadowing and its willingness to

direct judgment for the debtor, as well as the factual congruence between this case
and Russell and Swanson, convince us to allow the claim to proceed. Telecheck's
warning that "any delay" in payment "may affect your ability to use checks" could
confuse the unsophisticated consumer because it fails to explain how this

16
 comports with her thirty-day right to contest the debt. See Bartlett, 128 F.3d at
500 (explaining that creditor's right to sue and debtor's right to dispute the debt
are "not inconsistent, but by failing to explain how they fit together the letter
confuses."). Ozkaya may well have wished to assert a defense for nonpayment --
that the car repairs were not made correctly -- but feared that she did not really
have thirty days to dispute the debt if doing so would be seen as "a delay" or an
"attempt to avoid the debt" punishable by a sudden inability to write checks.
Compl. Ex. A. Telecheck compounded the confusion by urging Ozkaya to resolve
the dispute "quickly" when, in fact, she had at least thirty days.

Just as in Russell and Swanson, which involved implied threats to a debtor's credit
purchasing power, Ozkaya could "readily believe" that her ability to undertake a
fundamental financial transaction -- writing checks -- would be severely affected
if she did not pay the debt with haste. In its first communication to Ozkaya,
Telecheck stated that it had already entered he r name into its "national computer
files." This language creates an even greater sense of urgency than the Swanson
debt collector's statement about posting the debtor's account to its "master file"
after ten days should the debtor fail to pay. Telecheck's letter also presents a
stronger case for overshadowing than the communications in Russell or Swanson
because they involved implied threats (posting the collections to the agency's
file), not explicit threats to ruin the debtor's credit. Telecheck's language is far
more direct; the letter told Ozkaya that she could be prevented from writing
checks or opening a checking account "at over 90,000 merchants and banks who
use Telecheck nationally . . . until this is resolved." An unsophisticated consumer
could interpret this to mean that until she pays, she will not be able to write
checks -- anywhere -- because her name is already on some "bad check" list that
has been distributed across the country. (982 F.Supp. at 583-4).

Another example of "overshadowing" is furnished by Miller v. Payco-General

American Credits, Inc., 943 F.2d 482, 484 (4th Cir. 1991), where the debt collector's "screaming
headlines, bright colors and huge lettering" utilizing language "IMMEDIATE FULL
PAYMENT", "PHONE US TODAY" and "NOW", were held to have overshadowed the 30 day
validation notice. Another letter disapproved by a court stated in type several times that of the
required validation language "IF THIS ACCOUNT IS PAID WITHIN THE NEXT 10 DAYS IT
WILL NOT BE RECORDED IN OUR MASTER FILE AS AN UNPAID COLLECTION
ITEM. A GOOD CREDIT RATING -- IS YOUR MOST VALUABLE ASSET." Swanson v.
Southern Or. Credit Serv., Inc., 869 F.2d 1222, 1225 (9th Cir. 1988).

In Russell v. Equifax A.R.S., 74 F.3d 30, 35 (2d Cir. 1996) the court held:

A notice is overshadowing or contradictory if it would make the least

sophisticated consumer uncertain as to her rights. It is not enough for a debt
collection agency simply to include the proper debt validation notice in a mailing
to a consumer -- Congress intended that such notice be clearly conveyed. See
Swanson v. Southern Or. Credit Serv., Inc., 869 F. 2d 1222, 1225 (9th Cir. 1988)
(per curiam). Here the initial February notice failed to convey the validation
information effectively. We recognize there are many cunning ways to

17
 circumvent §1692g under cover of technical compliance, see Miller v. Payco-
General Am. Credits, Inc., 943 F.2d 482, 485 (4th Cir. 1991), but purported
compliance with the form of the statute should not be given sanction at the
expense of the substance of the Act. Since the language on the front of the notice
overshadowed and contradicted the language on the back of the notice, causing
the validation notice to be ineffective, the February notice violated § 1692g as a
matter of law.

A collection letter from an attorney demanding payment within ten days upon the
threat of suit was held to have contradicted the 30 day validation notice. Graziano v. Harrison,
supra, 950 F.2d 107 (3d Cir. 1991) (threat to sue if payment was not received within ten days
rendered the validation notice ineffective); Morgan v. Credit Adjustment Board, 999 F.Supp. 803
(E.D. Va. 1998); Cortright v. Thompson, 812 F.Supp. 772, 778 (N.D.Ill. 1992) (attorney
demand letter stating that "in the event the balance is not paid in full or satisfactory payment
arrangements made within ten days, it may be necessary to file at any time thereafter a lawsuit to
recover the amount due if so requested by my client . . . Although the letter is not as threatening
visually as some described in cases finding violations of §1692g(a), [citation], defendant's letter
appears on law firm stationery and states that it may be necessary to file a lawsuit at any time
after 10 days . . . ."); Swanson v. Southern Oregon Credit Service, Inc., supra, 869 F.2d 1222,
1225 (9th Cir. 1988) (§1692g notice accompanied by demand that account be paid within 10
days to avoid adverse credit report is not effectively conveyed, and demand violates statute; such
a communication would "lead the least sophisticated debtor, and quite probably even the average
debtor, only to one conclusion: he must ignore the right to take 30 days to verify his debt and act
immediately or he will be remembered as a deadbeat in the 'master file' of his local collection
agency and will, accordingly, lose his 'most valuable asset,' his good credit rating"); United
States v. National Financial Services, Inc., 820 F.Supp. 228 (D.Md. 1993), aff'd, 98 F.3d 131
(4th Cir. 1996) (letter containing §1692g notice and also stating that matter would be referred to
an attorney in ten days violated §1692g because the ten day demand "contradict[s] the validation
notice's declaration that the debtor has thirty days to dispute the debt"); Russey v. Rank in, 911
F. Supp. 1449 (D.N.M. 1995); Gary v. Kason Credit Corp., No. 3:95CV00054, Conn. Law
Tribune, Dec. 9, 1996 (D.Conn. Nov. 1, 1996); Creighton v. Emporia Credit Service, Inc., 1997
U.S. Dist. LEXIS 8556 (E.D. Va., May 20, 1997) ("Your unpaid bill must be paid in full to this
office upon receipt of this notice"; court described case as "borderline"); later opinion, 1997 U.S.
Dist. LEXIS 16356 (E.D.Va. Sept., 25, 1997), later opinion, 981 F.Supp. 411 (E.D.Va., 1991),
later opinion 1998 U.S. Dist. LEXIS 6589 (E.D. Va., April 8, 1998).

Similarly, demands for an "immediate" response or "immediate payment" have

been held to overshadow and contradict the validation notice. Beeman v. Lacy, Katzen, Ryen &
Mittleman, 892 F. Supp. 405, 407-8 (N.D.N.Y. 1995) ("Please immediately send your remittance,
in the above amount, payable to [the defendant], or communicate your failure to do so."); Adams
v. Law Offices of Stuckert & Yates, 926 F. Supp. 521 (E.D.Pa. 1996) ("immediate payment").

Confusing statements such as "if the above does not apply to you, we shall expect
payment or arrangement for payment within ten (10) days from the date of this letter," also violate
the statute. Chauncey v. JDR Recovery Corp., 118 F.3d 516 (7th Cir. 1997).

Sending a subsequent letter demanding action prior to the expiration of the

18
validation period violates §1692g. It is not proper to send a second letter demanding payment
within the validation period, without explaining that the period has not ended. Trull v. GC Servs,
LP, 961 F.Supp. 1199 (N.D.Ill. 1997); Flowers v. Accelerated Bureau of Collections, 96 C 4003,
1997 WL 224987, 1997 U.S. Dist. LEXIS 6070 (N.D.Ill. April 30, 1997); Badon v. Transworld
Systems, Inc., No. 97-18, 1997 WL 149986, 1997 U.S. Dist. LEXIS 3596, *12-13 (E.D. La.
March 26, 1997) ("barrage of letters and their language could lead the least sophisticated
consumer to disregard his validation rights or believe that they did not exist" where one
subsequent letter "conveys a sense of urgency and implies that the debt is valid and not
contestable" and a second "states that plaintiff has two options in settling a legitimate debt --
timely payment or through a collection effort"); Robinson v. Transworld Systems, Inc., 876
F.Supp. 385 (N.D.N.Y. 1995)(similar); Rabideau v. Management Adjustment Bureau, 805
F.Supp. 1086, 1094 (W.D.N.Y. 1992) (initial notice followed within validation period by second
letter demanding payment within 5 days); Booth v. Collection Experts, Inc., 969 F.Supp. 1161,
1166 (E.D.Wis. 1997) ("Language in communications sent after the validation notice may also
violate §1692g (a) by contradicting or overshadowing the prior notice"); Chapman v. Ontra, Inc.,
96 C 0019, 1997 WL 321681, 1997 U.S.Dist. LEXIS 8331, *7 (N.D.Ill 1997) ("language in letters
sent during the validation period must not overshadow or contradict the [§1692g] notice");
Gaetano v. Payco of Wisconsin, Inc., 774 F.Supp. 1404, 1411 (D.Conn. 1990) (initial notice
followed by second communication eight days later demanding payment within 72 hours).

In a questionable decision, Ninth Circuit held that in order to give rise to a valid
overshadowing claim, the action or response which the collector must demand "immediately" is
payment. Terran v. Kaplan, 109 F.3d 1428 (9th Cir. 1997).

However, the Seventh Circuit held to the contrary in Johnson v. Revenue Mgmt.
Corp., supra, 169 F.3d 1057 (7th Cir. 1999).

Even where a demand for immediate payment is required, it can be implied as well
as express. A letter may overshadow if the overall effect is to convey that message. In Jenkins v.
Union Corp., 999 F.Supp. 1120 (N.D. Ill. 1998), the court considered a letter which stated:

URGENT - THIS ACCOUNT HAS BEEN ASSIGNED TO OUR AGENCY FOR

IMMEDIATE COLLECTION.

PLEASE BE ADVISED THAT WE HAVE BEEN AUTHORIZED TO PURSUE

COLLECTION AND ARE COMMITTED TO MAKE WHATEVER EFFORTS
ARE NECESSARY AND PROPER TO EFFECT COLLECTION.

STRONGLY RECOMMEND YOU CONTACT OUR CLIENT TO MAKE

PAYMENT ARRANGEMENT.

The court found this to violate §1692g, holding:

Terrafino likewise challenges the legality of his initial dunning letter, dated
August 22, 1995. although this letter does not use the words "immediate
payment," we conclude that, viewed as a whole, the letter creates an apparent and
unexplained contradiction between message and the thirty-day validation rights

19
 discussed at the bottom of the le tter.

The letter begins with the declaration "URGENT," this is followed by a statement
informing Terrafino that his account has been "assigned to our agency for
immediate collection." Contrary to Transworld's assertions, the unsophisticated
consumer is likely to understand "immediate collection" as an effort to extract
immediate payment form him, not as a reference to the collector's duties. While
Bartlett, makes clear that a debt collector need not suspend collection efforts
during the validation period, these efforts run afoul of the FDCPA if they create an
unexplained contradiction that confuses the debtor. 128 F.3d at 500. The
confusion in this letter is compounded by its last sentence, which "[s]trongly
recommend[s] you contact our client to make payment arrangement." Read
together, the reference to "immediate collection" and the "strong" recommendation
to contact the creditor to arrange for payment are the substantive equivalent of the
request for immediate payment in Jenkins' first letter.

A collection letter that does not expressly request immediate payment can also
overshadow the validation notice by creating a confusing impression of urgency,
when, in reality, the consumer has thirty days in which to decide on his course of
action. See Ozkaya v. Telecheck Servs., Inc., 982 F.Supp. 578, 583-84 (N.D. Ill.
1997) (plaintiff stated valid overshadowing claim where offending letter was
confusing because it "urg[ed] [plaintiff] to resolve the dispute 'quickly' when, in
fact, she had at least thirty days.") Terrafino's letter begins by proclaiming that
it is "URGENT"; the sense of urgency is further communicated by the "immediate
collection" language and in the letter's express request for action -- a "strong"
recommendation in the final paragraph tha t Terrafino contact the creditor to make
payment arrangement. The middle paragraph sounds pressing and ominous as
well: "Please be advised that we have been authorized to pursue collection and are
committed to make whatever efforts are necessary and proper to effect collection."
We find that this language creates an apparent contradiction with the validation
notice by creating a false sense of urgency.

Accordingly, we grant Terrafino summary judgment on his overshadowing claim

premised on the language in his first letter, and deny defendants' cross motion for
summary judgment on this claim. We emphasize, however, that our decision to
grant Terrafino summary judgment on this ground is based on the letter read as a
whole, not on any one phrase scrutinized in isolation.

Requests that the consumer telephone the debt collector induce the consumer to
waive his right to verification by failing to make the request in writing, as required. Miller v.
Payco-General American Credits, Inc., supra, 943 F.2d 482 (4th Cir. 1991); Woolfolk v. Van Ru
Credit Corp., 783 F. Supp. 724, 726 (D. Conn. 1990); Flowers v. Accelerated Bureau of
Collections, 96 C 4003, 1997 U.S.Dist. LEXIS 3354, 1997 WL 136313 (N.D.Ill. Mar 19, 1997).
Contra, Terran v. Kaplan, supra. "A consumer calling the defendant would not be exercising her
validation rights and would not be entitled to the statutory cessation of debt collection activities."
Gaetano v. Payco of Wisconsin, Inc., 774 F. Supp. 1404, 1412 (D. Conn. 1990). On the other
hand, the inclusion of a settlement offer that expired shortly before the end of the validation

20
period has been held not to violate §1692g. Harrison v. NBD, Inc., supra, 968 F. Supp. 837
(E.D.N.Y. 1997).

The notice should specify that the debt has 30 days after receipt of the letter to
dispute the debt. Vera v. Trans-Continental Credit & Collection Corp., 98 Civ. 1866, 1999 WL
292623,
1999 U.S. Dist. LEXIS 3464 (S.D.N.Y. May 10, 1999).

Eviction notices that are sent out by a "debt collector" and demand money in less
than 30 days violates the FDCPA. Romea v. Heiberger & Associates, 163 F.3d 111 (2d Cir.
1998). However, if the landlord or servicing agent sends the notice it is not a "debt collector"
subject to the FDCPA.

Recent cases hold that any contradiction of the §1692g warnings is a violation, and
that it is not necessary to establish a violation that the contradiction be "threatening" or visually
overshadow the required notice. Russell v. Equifax A.R.S., 74 F.3d 30 (2d Cir. 1996); Adams v.
Law Offices of Stuckert & Yates, 926 F.Supp. 521 (E.D.Pa. 1996); Flowers v. Accelerated
Bureau of Collections, 96 C 4003, 1997 U.S.Dist. LEXIS 3354, 1997 WL 136313 (N.D.Ill. Mar
19, 1997). In other words, anything that confuses unsophisticated consumers as to their § 1692g
rights, is sufficient to violate §1692g.

A. OTHER §1692g VIOLATIONS

Where the validation notice is placed on the back of the correspondence, without a
legible and reasonably prominent reference on the front, §1692g is violated. Riveria v. MAB
Collections, Inc., supra, 682 F. Supp. 174, 178 (W.D.N.Y. 1988); Ost v. Collection Bureau, Inc.,
493 F.Supp. 701 (D.N.D. 1980); Phillips v. Amana Collection Servs., 89-CV-1152, 1992 WL
227839,
1992 U.S. Dist. LEXIS 13558 (W.D.N.Y. Aug. 25, 1992); see also, Rabideau v. Management
Adjustment Bureau, 805 F.Supp. 1086 (W.D.N.Y. 1992); Colmon v. Payco-General American
Credits, 774 F. Supp. 691 (D.Conn. 1990). Contra: Blackwell v. Professional Business Services,
Inc., 526 F.Supp. 535 (N.D.Ga. 1981). However, the enclosure of a separate 8-1/2 x 11"
validation notice in the same envelope has been found to be acceptable. Cavallaro v. Law Office
of Shapiro & Kreisman, 933 F.Supp. 1148 (E.D.N.Y. 1996).

The FTC staff has stated that a debt collector may not charge for furnishing
validation information. One decision held that such a charge did not violate §1692g per se, but
found it unlawful under §1692f on the ground that it was not authorized by contract or law.
Sandlin v. Shapiro & Fishman, 919 F. Supp. 1564 (M.D.Fla. 1996); see also Harvey v. United
Adjusters, 509 F.Supp. 1218, 1221 (D.Ore. 1981) (defendant's choice of validation notice
language cannot impose additional burdens on the debtor).

A debt collector violates §1692g by failing to provide its address so that the debtor
can exercise his right to validate the debt. Failure to include the collector's address violates
§1692g even if the complete text of the §1692g notice is provided and nothing requires action in
less than 30 days. Cortez v. Trans Union Corp., 94 C 7705, 1997 WL 7568, 1997 U.S. Dist.
LEXIS 31 (N.D. Ill. Jan. 3, 1997); Wegmans Food Markets, Inc. v. Scrimpsher, 17 B.R. 999,

21
1014 (Bankr. N.D.N.Y. 1982) ("The absence of a return address on a debt collector's notices
effectively nullifies the consumer's rights set out in 15 U.S.C 1692g, which arise from a
consumer's written notification to the debt collector"; emphasis in original)

Directing the consumer to contact the creditor rather than the debt collector if he
disputes the debt violates §1692g. Blair v. Collectech Systems, Inc., 97 C 8630, 1998 WL
214705,
1998 U.S. Dist. LEXIS 6173 (N.D. Ill. April 24, 1998); Macarz v. Transworld Systems, 26
F.Supp. 2d 368 (D.Conn. 1998). Contacting the creditor does not preserve the consumer's rights.

A. DEBT COLLECTION WARNING: 15 U.S.C. §1692e(11)

Since December 30, 1996, 15 U.S.C. §1692e(11) has prohibited:

The failure to disclose in the initial written communication with the consumer
and, in addition, if the initial communication with the consumer is oral, in that
initial oral communication, that the debt collector is attempting to collect a debt
and that any information obtained will be used for that purpose, and the failure to
disclose in subsequent communications that the communication is from a debt
collector, except that this paragraph shall not apply to a formal pleading made in
connection with a legal action.

Section 1692e(11) formerly required that the debt collector "disclose clearly in all
communications made to collect a debt or to obtain information about a consumer, that the debt
collector is attempting to collect a debt and that any information obtained will be used for that
purpose." 15 U.S.C. §1692e(11).

Prior to the enactment of the FDCPA, debt collectors would send people mail
purporting to seek employment references, inviting the recipient to collect a prize, or otherwise
disguising its true purpose. One enterprising pair of debt collectors operated under such names as
"National Research Company," "National Marketing Service," "United States Credit Control
Bureau," "Claims Office," "Bureau of Verification," "Bureau of Reclassification," "Reverification
Office" and "Disbursements Office". They would disseminate -- at the rate of 700,000 every six
months -- forms with titles such as "Current Employment Records" and "Change of Address"
and requesting address, employment, banking, and similar information. They also sent out
"Claimants Information Questionnaires" asking the recipient to verify that he or she was the party
entitled to receive unclaimed money. Mohr v. FTC, 272 F.2d 401 (9th Cir. 1959) (affirming first
cease and desist order); People v. National Research Co., 201 Cal.App.2d 765, 20 Cal.Rptr. 516
(1962) (injunctive action to restrain practices); In re Floersheim, 316 F.2d 423 (9th Cir. 1963)
(contempt proceeding based on first cease and desist order); Floersheim v. FTC, 411 F.2d 874
(9th Cir. 1969) (affirming another cease and desist order); Floersheim v. Weinburger, 346 F.Supp.
950 (D.D.C. 1972), aff'd, Floersheim v. Engman, 161 U.S.App. D.C. 30, 494 F.2d 949 (1973)
(attempted declaratory action by collectors seeking to determine whether they were in compliance
with the second cease and desist order); United States v. Floershe im, . CV 74-484-RF, 1980 WL
1852, 1980 U.S.Dist. LEXIS 11788, 1980-2 CCH Trade Cas. ¶63,368 (C.D.Cal. 1980) (civil
penalty action for noncompliance with second cease and desist order).

22
 Other debt collectors used notices representing that the sender had correspondence
or packages for delivery to a debtor; these would be sent to references used by a debtor. Dejay
Stores, Inc. v. FTC, 200 F.2d 865 (2d Cir. 1952); Rothschild v. FTC, 200 F.2d 39 (7th Cir. 1952).

In In re London Credit & Discount Corp., 78 FTC 541 (1971) (consent order), debt
collectors sent letters purporting to be connected with auditing procedures. The collectors were
enjoined from "Representing, directly or by implication, that any letter, demand, inquiry or other
communication originated by respondents was originated by an independent auditing or any other
person, firm or corporation."

Another such consent order was entered in In re Marjorie P. Ingram, 67 FTC 1065
(1965), where the collectors were enjoined from falsely "[r]epresenting, directly or by
implication, that the respondents are engaged in the business of auditing the accounts and records
of others." (67 FTC at 1072) See also, Opinion of the Attorney General of the State of Arizona,
77-174, 1977 Ariz. AG LEXIS 66 (Sept. 5, 1977), finding it improper for a collection agency to
send out documents entitled "Audit Verification."

Yet other collectors called themselves "State Credit Control Board", Slough v. FTC,
396 F.2d 870 (5th Cir. 1968), "Business Research" and "Affiliated Credit Exchange," Bernstein v.
FTC, 200 F.2d 404 (9th Cir. 1952), "Manpower Classification Bureau" and "American Deposit
System," Rothschild v. FTC, supra, 200 F.2d 39 (7th Cir. 1952), "General Forwarding System,"
Silverman v. FTC, 145 F.2d 751 (9th Cir. 1944), "National Retail Board of Trade" and "National
Liquidators, Inc.", In re National Retail Board of Trade, 57 FTC 666 (1960), "Retail Board of
Trade," In re Rice, 53 FTC 5 (1956), "Allied Information Service" and "National Deposit
System," In re Wacksman, 56 FTC 1615 (1960), "Cavalier Reserve Fund" and "Liberty Reserve
Fund," In re Pitler, 56 FTC 803 (1960) and "National Clearance Bureau," National Clearance
Bureau v. FTC, 255 F.2d 102 (3d Cir. 1958).

Another collection agency called itself the "United States Association of Credit
Bureaus." The use of this name was held to violate §5 of the FTC Act on the ground that it was
not an "association," or a "credit bureau," nor connected with the "United States." In re United
States Ass'n of Credit Bureaus, Inc., 58 FTC 1044 (1961), aff'd United States Ass'n of Credit
Bureaus, Inc. v. FTC, 299 F.2d 220 (7th Cir. 1962).

A. THREATS OF UNINTENDED, UNAUTHORIZED OR ILLEGAL

ACTION

The FDCPA prohibits "the threat to take any action that cannot legally be taken or
that is not intended to be taken." 15 U.S.C. §1692e(5). Examples of violations include:

_ Threatening criminal prosecution or liability for multiple damages or civil

penalties, when collecting bad checks. If the collector states or implies that it regularly prosecutes
criminally when it does not, its communications violate §1692e(5). Alger v. Ganick, O'Brien &
Sarin, 35 F.Supp. 2d 148 (D.Mass. 1999); Davis v. Commercial Check Control, Inc., 98 C 631,
1999 WL 89556, 1999 U.S. Dist. LEXIS 1682 (N.D.Ill. Feb. 16, 1999).
_
_ Section 1692e(5) is also violated if the collector misstates the consumer's

23
liability for multiple damages or civil penalties, such as by implying that liability for multiple
damages is absolute when the consumer has a right to tender the amount of the check prior to trial
and avoid liability for multiple damages, or where a statutory notice is a precondition to liability
and no such notice has been given. Stadler v. Devito, 931 P.2d 573 (Colo. App. 1996) (where bad
check statute required notice by certified mail before debtor was liable for enhanced damages,
collection agency that filed action without giving proper notice violated state analog of FDCPA);
but see Davis v. Commercial Check Control, Inc., 98 C 631, 1999 WL 89556, 1999 U.S. Dist.
LEXIS 1682 (N.D.Ill. Feb. 16, 1999).
_
_ The threat to file suit or take other collection actions within a short time
when the creditor has not authorized the action or the debt collector does not take the action within
the period stated. Bentley v. Great Lakes Collection Bureau, 6 F.3d 60 (2d Cir. 1993); Graziano
v. Harrison, supra, 950 F.2d 107 (3d Cir. 1991); Pipiles v. Credit Bureau of Lockport, Inc., supra,
886 F.2d 22 (2d Cir. 1989) (48 hour notice); Oglesby v. Rotche, 93 C 4183, 1993 WL 460841,
1993 U.S.Dist. LEXIS 15687 (N.D.Ill. 1993).
_
_ Threats of suit by an attorney not licensed within the jurisdiction or who
does not in fact file suits in the jurisdiction. Rosa v. Gaynor, 784 F.Supp. 1, 5 (D.Conn. 1989).
Courts have divided with respect to whether any threat to take collection action by a debt collector
that is required to be, but is not, licensed in the jurisdiction, violates the FDCPA. Courts finding a
violation include United States v. National Financial Services, Inc., 820 F.Supp. 228, 235-36 (D.
Md. 1993), aff'd, 98 F.3d 131 (4th Cir. 1996); Sibley v. Firstcollect, Inc., 913 F. Supp. 469
(M.D.La. 1995); Russey v. Rankin, 911 F. Supp. 1449 (D.N.M. 1995); Kuhn v. Account Control
Technology, Inc., 865 F. Supp. 1443, 1451-52 (D.Nev. 1994); In re Belile, 209 B.R. 658 (Bankr.
E.D. Pa. 1997); Rosa v. Gaynor, 784 F.Supp. 1, 4-5 (D. Conn. 1989); and Gaetano v. Payco of
Wisconsin, Inc., 774 F. Supp. 1404, 1413-14 (D.Conn. 1990). Contra, Wade v. Regional Credit
Ass'n, 87 F.3d 1098 (9th Cir. 1996).
_
_ Other cases supporting the proposition that a violation of state law is also a
violation of the FDCPA include Veach v Sheeks, 316 F.3d 690, 693 (7th Cir. 2003); Picht v. Jon
R. Hawks, Ltd., 236 F.3d 446, 448 (8th Cir. 2001) ("The FDCPA prohibits, inter alia, the use of
debt collection practices that violate state law"); see §§1692f(1) ("permitted by law" not limited to
state law); §§1692e(5) ("action that cannot legally be taken") not limited to state law; §§1692e(9)
(misrepresentation of document's federal or state source); Romine v. Diversified Collection
Services, Inc., 155 F.3d 1142, 1149 (9th Cir. 1998) (federal tariff applied to determine FDCPA
violation); Talbott v. GC Services Limited Partnership, 53 F. Supp. 2d 846 (W. D. Va. 1999)
(same); Adams v. First Federal Credit Control, Inc., 1992 U.S. Dist. LEXIS 8306, 1992 WL
131121 (N.D. Ohio May 21, 1992) (using the name "First Federal Credit Control" plus a letterhead
that resembled the seal of the United States and a bald eagle violated the FDCPA, citing 18 U.S.C.
§§ 712);

_ Threatening to take or taking action which constitutes the unauthorized

practice of law, such as when a collection agency files suit in its own name to collect a debt when
not permitted to do so under state law. Poirier v. Alco Collections, Inc., 107 F.3d 347 (5th Cir.
1997); Marchant v. U.S. Collections, Inc., 12 F.Supp. 2d 1001 (D.Ariz. 1998).
_
_ Threats to file suit in a forum where suit cannot legally be filed under 15

24
U.S.C. §1692i. Wiener v. Bloomfield, 901 F. Supp. 771 (S.D.N.Y. 1995).
_
_ Threats to enforce creditor remedies which cannot be enforced at the time
stated or to the extent stated. For example, a debt collector may threaten to obtain a wage
garnishment or execution without disclosing that this can only be done after notice, hearing and
judgment, or may threaten to garnish "all" of a consumer's wages when the law clearly imposes
limitations on the amount which may be garnished. Oglesby v. Rotche, 93 C 4183, 1993 WL
460841, 1993 U.S.Dist. LEXIS 15687 (N.D.Ill. 1993) (threat to garnish all wages and attach all
property); Woolfolk v. Van Ru Credit Corp., supra, 783 F.Supp. 724 (D. Conn. 1990) (oppressive
list of post-judgment remedies); Seabrook v. Onondaga Bureau of Medical Economics, Inc., 705
F.Supp. 81 (N.D.N.Y. 1989) (threat to garnish wages in excess of amounts permitted under federal
law); Cacace v. Lucas, 775 F.Supp. 502 (D.Conn. 1990) (letter stating that litigation could result in
seizure of real estate and bank account deceptive; mere filing of litigation could not have any of
stated effects); Young v. Dey, 93 CV 690 (D.Conn. 1994) (reference to attachment without
mention of exemptions); Holt v. Wexler, 98 C 7285, 1999 U.S. Dist. LEXIS 8785 (N.D. Ill. 1999)
("Additional legal proceedings will be implemented to enforce collection; credit bureaus have
recorded the fact in your credit report that you are a judgment debtor and skip tracers may contact
your references, your former employers, your relatives and your neighbors in an effort to gain
information about your assets."). But see Kleczy v. First Federal Credit Control, Inc., 21 Ohio
App.3d 56, 486 N.E.2d 204 (1984) ("avoid further action" was not sufficiently threatening to
violate §1692(e)(5)).
_
_ A debt collector which also functions as a credit reporting agency cannot
threaten to disseminate credit information in a manner prohibited by the Fair Credit Reporting Act
or the FDCPA (15 U.S.C. §1692c(b)) unless the debtor pays the debt.
_
_ Threats to contact employers or take other action prohibited by the FDCPA
or other law, Swanson v. Southern Oregon Credit Service, Inc., 869 F.2d 1222, 1226-27 (9th Cir.
1988). or which is not in fact taken. Beasley v. Collectors Training Institute of Ill. Inc., 98 C 8113,
1999 WL 675196, 1999 U.S. Dist. LEXIS 13275 (N.D.Ill. August 19, 1999).
_
_ Threats may be implicit as well as express. Statements that a debt will be subject to
"legal review" or "will be transferred to an attorney" are implicit threats of suit. Drennan v. Van
Ru Credit Corp., 950 F.Supp. 858 (N.D.Ill. 1996); United States v. National Financial Services,
Inc., 98 F.3d 131 (4th Cir. 1996). A statement by an attorney that "all necessary actions" will be
taken is a threat of suit. Strombach v. Knepper & Moga, 1998 U.S.Dist. LEXIS 15533 (N.D.Ill.,
Sept. 23, 1998)."Because to most consumers, the relevant distinction between a collection agency
and an attorney is the ability to sue, . . . the debtor would understand the disparate treatment to be
the institution of suit." United States v. National Financial Services, Inc., supra. A statement that
action "could be" or "can be" taken is a "threat." Vaughn v. CSC Credit Services, 93 C 4151,
1994 WL 449247, 1994 U.S. Dist. LEXIS 2172, *24 (N.D. Ill. March 1, 1994) (Magistrate Judge's
opinion), adopted, 1995 WL 51402, 1995 U.S. Dist. LEXIS 1358 (N.D. Ill. Feb. 3, 1995). A
statement that the debtor would be "susceptible to immediate criminal prosecution" if a check was
not made good in 10 days conveyed the impression that "prosecution would follow non-payment".
Boyce v. Attorney's Dispatch Service, 1999 U.S. Dist. LEXIS 1124 (S.D. Ohio, Feb. 2, 1999).
_
_ A statement that suit would be "recommended" is misleading where the collector

25
knows suit is never filed because of the small size of the debt. Boyce v. Attorney's Dispatch
Service, 1999 U.S. Dist. LEXIS 1124 (S.D. Ohio, Feb. 2, 1999).
_
_ A collection letter that stated that the creditor had authorized whatever legal means
were necessary to collect the debt and that referred to post-judgment attachment and garnishment
implied that legal proceedings were imminent when they were not and violated 15 U.S.C.
§1692e(5). Bentley v. Great Lakes Collection Bureau, 6 F.3d 60 (2d Cir. 1993).
_
B. UNAUTHORIZED CHARGES

The FDCPA prohibits "[t]he collection of any amount (including any interest, fee,
charge, or expense incidental to the principal obligation) unless such amount is expressly
authorized by the agreement creating the debt or permitted by law" and “[t]he false representation
of . . . (A) the character, amount, or legal status of any debt; or (B) any services rendered or
compensation which may be lawfully received by any debt collector for the collection of a debt”.
15 U.S.C. §§1692f(1), 1692e(2).

This language has been interpreted to require either (i) an express agreement for
the addition of interest or other charges to the principal amount of a debt, which agreement is not
prohibited by applicable state and federal law, or (ii) a statute or common- law rule that permits the
addition of interest or other amounts to the debt even in the absence of an agreement. West v.
Costen, 558 F.Supp. 564 (W.D.Va. 1983); Johnson v. Riddle, 305 F.3d 1107, 1117-18 (10th Cir.
2002); In re Scrimpsher, 17 B.R. 999 (Bankr. N.D.N.Y. 1982) (unauthorized "service charge" on
NSF checks); Clark v. Marine Midland Bank, 67 A.D.2d 846, 413 N.Y.S.2d 9 (1979) (same).
"Under this provision, it is unconscionable for a debt collector to collect any amount in excess of
the princ ipal amount of a loan, including collection charges, unless these charges are authorized
expressly by the terms of the agreement creating or evidencing the debt or unless the charges are
authorized explicitly by applicable state law." Patzka v. Viterbo College, 917 F.Supp. 654, 658
(W.D. Wisc. 1996). Substantive state law is to be determined in the usual way under Erie.
Johnson v. Riddle, 305 F.3d 1107, 1117 (10th Cir. 2002).

Typical violations include the imposition of service charges for bad checks where
not permitted by agreement and applicable state law, and the imposition of attorney's fees where
no contract or statute authorizes them. Strange v. Wexler, 796 F.Supp. 1117 (N.D.Ill. 1992).

Bad debt buyers frequently commit violations of this nature, because they acquire
debts with little or no documentation and charge interest rates that can only be charged by
supervised lenders (e.g., banks, consumer small loan licensees) without possessing such licenses.

Percentage attorney's fees or collection fees are often not permitted under state law,
including the law of Illinois (except for credit union debts and federally- guaranteed student loans)
and Indiana (except for federally- guaranteed student loans). Kojetin v. C.U. Recovery, Inc. ,1999
U.S. Dist. LEXIS 1745 (D. Minn.Feb. 17, 1999). But see Talbott v. GC Services LP., 1999 U.S.
Dist. LEXIS 8254 (W.D.Va 1999). Rather, the debtor is liable for attorney's fees on collection
agency fees computed on a "lodestar" basis.

One court held that a statement that the debtor might "also be responsible for

26
interest and any other fees to which we are legally entitled, along with the original balance," did
not violate the FDCPA because of the qualification "to which we are legally entitled." Hodrosky
v. Polo Club Apartments, 1997 Ohio App. LEXIS 1330 (8th Dist., April 3, 1997). This decision
would appear to be correct only insofar as it was legally possible to claim interest and costs.

Filing suit on an allegedly forged instrument is not a violation. Transamerica

Finan. Services, Inc. v. Sykes, 171 F.3d 553 (7th Cir. 1999).

One frequent area of litigation is charges on bad checks. In this area, courts have
held:

_ "Service charges" could not be added to the amounts of dishonored checks

on the basis of posted signs unless there was evidence that the check writer actually saw the sign,
or that the charges otherwise actually formed part of the contract entered into with the consumer.
Newman v. Checkrite of California, Inc., 912 F. Supp. 1354 (E.D.Cal. 1995).
_
_ For such charges to be valid as incidental damages under the Uniform
Commercial Code, debt collectors must establish that "the amount of their service charges is a
commercially reasonable incidental damage to the merchant." A debt collector cannot do this "by
referring to its own charges to the merchant as evidence of reasonable or actual cost." Newman
v. Checkrite of California, Inc., 912 F. Supp. 1354 (E.D.Cal. 1995); Ballard v. Equifax Services,
Inc., 27 F.Supp. 2d 1201 (E.D.Cal. 1998), class certification granted, claim dismissed, Ballard v.
Equifax Check Servs., 186 F.R.D. 589 (E.D. Cal. 1999). The Second Circuit has approved charges
in the $20 range on this theory. Tuttle v. Equifax Check Services, Inc., 190 F.3d 9 (2d Cir. 1999).
_
_ A debt collector violated the FDCPA by describing demands for additional
fees as "legal notice fees" or "legal consideration for covenant not to sue," as such names imply
that they are an authorized legal expense or an obligatory payment to avoid suit. Newman v.
Checkrite of California, Inc., 912 F. Supp. 1354 (E.D.Cal. 1995); Ditty v. Check Rite, Ltd., 973
F.Supp. 1320 (D.Utah 1997), class certification granted, in part, class certification denied, in part,
182 F.R.D. 639 (D. Utah 1998), mot. granted, 1998 WL 663357, 1998 U.S. Dist. LEXIS 12,940
(D. Utah Aug. 13, 1998).
_
_ Where state law requires a formal demand by certified mail before statutory
damages are available, it is improper to represent that the check writer is potentially liable for
those damages when the demand requirement is neither complied with nor disclosed. Newman v.
Checkrite of California, Inc., 912 F. Supp. 1354 (E.D.Cal. 1995); But see Davis v. Commercial
Check Control, Inc., 98 C 631, 1999 WL 89556, 1999 U.S. Dist. LEXIS 1682 (N.D.Ill. Feb. 16,
1999).
_
_ Some states, including Illinois, authorize modest charges of this nature under
specified circumstances, generally in the $20-30 range.
_
B. FALSE REPRESENTATION THAT
COMMUNICATION IS FROM AN ATTORNEY

Another popular recent debt collection technique is to have large numbers of

27
collection letters, with implicit or explicit threats of suit, sent under the name of an attorney. The
courts have recognized that "A debt collection letter on an attorney's letterhead conveys authority
and credibility." Crossley v. Lieberman, 868 F.2d 566, 570 (3d Cir. 1989). The clear implication
of any attorney letter is a threat of suit.

Unless the attorney has in fact reviewed the debtor's file and made a professional
judgment that whatever action is threatened is appropriate, and the threatened action has been
authorized by the creditor, the use of such letters is a violation of §1692e(3), which prohibits "[t]he
false representation or implication that any individual is an attorney or that any communication is
from an attorney." Clomon v. Jackson, 988 F.2d 1314, 1321 (2d Cir. 1993); Avila v. Rubin, 84
F.3d 222 (7th Cir. 1996); Nielsen v. Dickerson, 307 F.3d 623 (7th Cir. 2002); United States v.
National Financial Services, Inc., 98 F.3d 131 (4th Cir. 1996); Taylor v. Perrin, Landry, DeLaunay
& Durand, 103 F.3d 1232 (5th Cir. 1997); Bitah v. Global Collection Servs., 968 F.Supp. 618
(D.N.M. 1997); Masuda v. Thomas Richards & Co., 759 F.Supp. 1456, 1461-2 (C.D.Cal. 1991)
("the letter falsely suggests to the least sophisticated debtor that an attorney has been retained to
collect his or her particular debt. Thus, the letter implies to the recipient that TRC considers the
debt to be more serious than TRC, in fact, considers it to be. . . . The representation that
independent outside counsel has been hired may unjustifiably frighten the unsophisticated debtor
into paying a debt that he or she does not owe. The FDCPA must be construed to proscribe this
means of collection"); United States v. Central Adjustment Bureau, Inc., 667 F.Supp. 370, 380-81
(N.D.Tex. 1986) ("The attorney must have sufficient information to satisfy himself that it is proper
to send the dunning letter, i.e., he must investigate the merits of the claim before making a demand
for payment. . . . the attorney must have the file for review to determine the merits of the claim, as
well as the limits of his authority"); Federal Trade Commission, Statements of General Policy or
Interpretation, Staff Commentary on the Fair Debt Collection Practices Act, 53 Fed.Reg. 50,097, at
50,105 (1988) ("a debt collector may not send a computer-generated letter deceptively using an
attorney's name"). “[A]n attorney sending dunning letters must be directly and personally involved
in the mailing of the letters in order to comply with the strictures of FDCPA. This may include
reviewing the file of individual debtors to determine if and when a letter should be sent or
approving the sending of letters based on the recommendations of others. [citation] Given these
requirements, . . . there will be few, if any, cases in which a mass-produced collection letter
bearing the facsimile of an attorney's signature will comply with the restrictions imposed by
section 1692e." Avila, 84 F.3d at 228. The court explained:

An unsophisticated consumer, getting a letter from an "attorney," knows the price

of poker has just gone up. And that clearly is the reason why the dunning campaign
escalates from the collection agency, which might not strike fear in the heart of the
consumer, to the attorney, who is better positioned to get the debtor's knees
knocking.
A letter from an attorney implies that a real lawyer, acting like a lawyer usually
acts, directly controlled or supervised the process through which the letter was sent.
That's the essence of the connotation that accompanies the title of "attorney." A
debt collection letter on an attorney's letterhead conveys authority. Consumers are
inclined to more quickly react to an attorney's threat than to one coming from a debt
collection agency. It is reasonable to believe that a dunning letter from an attorney
threatening legal action will be more effective in collecting a debt than a letter from
a collection agency. The attorney letter implies that the attorney has reached a

28
 considered, professional judgment that the debtor is delinquent and is a candidate
for legal action. And the letter also implies that the attorney has some personal
involvement in the decision to send the letter. Thus, if a debt collector (attorney or
otherwise) wants to take advantage of the special connotation of the word
"attorney" in the minds of delinquent consumer debtors to better effect collection of
the debt, the debt collector should at least ensure that an attorney has become
professionally involved in the debtor's file. Any other result would sanction the
wholesale licensing of an attorney's name for commercial purposes, in derogation of
professional standards:

[A] lawyer has been given certain privileges by the state. Because of these
privileges, letters . . . purporting to be written by attorneys have a greater
weight than those written by laymen. But such privileges are strictly
personal, granted only to those who are found through personal examination
to measure up to the required standards. Public policy therefore requires that
whatever correspondence purports to come from a lawyer in his official
capacity must be at least passed upon and approved by him. He cannot
delegate this duty of approval to one who has not been given the right to
exercise the functions of a lawyer.

American Bar Association, Formal Opinion 68 (1932). (84 F.3d at 229)

A number of collection lawyers have recently sent out letters on attorney letterhead
which purport to state that the sender has not reviewed the debtor's file. This would not appear to
eliminate the deception, as it is possible the consumer will not notice the disclaimers.
Furthermore, the mere sending of an attorney letter is a representation that the lawyer is acting as a
lawyer:

The committee believes that before a lawyers letter goes to a debtor the file must
have been turned over to the lawyer for collection. The lawyer must determine
what rights the parties have and whether applicable statutory or other legal
requirements have been met. The lawyer must have authority as well as
responsibility to determine the legal steps to be taken and to negotia te in behalf of
the client. None of these factors can exist if all the lawyer does is lend the lawyer's
name and letterhead to the client's use. (Iowa ethics opinion 91-24, Nov. 14, 1991.)

Similarly, Texas Ethics Opinion 484 states:

When an attorney signs a debtor letter or authorizes someone under his or her direct
supervision to sign such a letter, such action manifests that the attorney has
exercised professional judgement that the particular letter is appropriate for the
particular debtor and for a debtor's particular account. The rules require that an
attorney should review the debtor's file and determine that the letter to be sent is
appropriate for this particular debtor. A lawyer must exercise care and independent
judgement to make sure that each debtor's letter is accurate and appropriate as to the
account of the debtor.

29
 In trademark law, it is not permissible to use an established trademark coupled with
a disclosure that the owner has not authorized the defendant's product. Boston Professional
Hockey Ass'n v. Dallas Corp. & Emblem Mfg., Inc., 510 F.2d 1004, 1013 (5th Cir. 1975).
Similarly, FTC Act §5 cases generally find disclaimers inadequate, at least where they go
to the central message conveyed. In re Cliffdale Associates, 103 FTC 110 (1984). If an attorney
has not acted as such with respect to a debt, the use of an attorney letterhead serves no legitimate
purpose other than to deceive those who do not notice on grasp the disclaimer.
A. CONTACTS WITH THIRD PARTIES

Section 1692c provides debtors the "extremely important protection" of prohibiting

debt collectors from contacting third parties, including a debtor's employer, relatives (other than
the debtor's spouse), friends or neighbors, for any purpose other than obtaining "location
information." See also S. Rep. No. 382, 95th Cong. 2d Sess. 4, reprinted in 1977 U.S.C.C.A.N.
1695, 1698-99. There are a few highly regulated exceptions where the debtor consents, a court has
granted permission or to effect a post-judgment judicial remedy. § 1692c; F.T.C. Official Staff
Commentary § 805(b), 53 Fed. Reg. 50104; S. Rep. No. 382 , at 4. As stated by the Senate,
"[s]uch contacts are not legitimate collection practices and result in serious invasions of privacy, as
well as loss of job." Id. Debt collectors cannot communicate a consumer's personal affairs to third
persons". Id.

Contacts with the consumer's relatives, other than the spouse, violate the FDCPA.
West v. Costen, supra, 558 F.Supp. 564 (W.D.Va. 1983). Leaving a message on an answering
machine or voice mail system may result in an illegal third party communication if it is foreseeable
that a third party with whom the collector could not communicate directly would access the device
or system. Chlanda v. Wymard, C-3-93-321, 1995 U.S. Dist. LEXIS 14394 (S.D.Ohio 1995). See
Committe v. Dennis Reimer Co., L.P.A., 150 F.R.D. 495 (D.Vt. 1993).

The section is violated by any communication to a third party, even if the debt is not
expressly referenced, other than one that strictly complies with the provision allowing location
information to be gathered. Thus, a message left with a neighbor for the debtor to call regarding
some urgent matter is illegal. West v. Nationwide Credit, Inc., 998 F. Supp. 642 (W.D. N.C.
1998); Shaver v. Trauner, 1998 U.S.Dist. LEXIS 19648 (C.D.Ill., Jul. 31, 1998) (class and
adoption of denial of motion to dismiss), 1998 U.S.Dist. LEXIS 19647 (C.D.Ill., May 29, 1998)
(Magistrate Judge's denial of motion to dismiss).

A. MISCELLANEOUS MISREPRESENTATIONS

A debt collector’s misrepresentation that it is an assignee is

actionable. Gearing v. Check Brokerage Corp., 233 F.3d 469 (7th Cir. 2000).
B.
C. Gearing also holds that misrepresentations are actionable regardless
of intent. 233 F.3d at 473. The "FDCPA is a strict liability statute," and "proof of
one violation is sufficient to support summary judgment for the plaintiff." Cacace
v. Lucas, 775 F. Supp. 502, 505 (D. Conn. 1990).
D.
E. ACQUISITION OF LOCATION INFORMATION

30
 The debt collector may not communicate with someone other than the consumer
except to obtain location information. 15 U.S.C. §1692b. In doing so the debt collector must
identify himself but not discuss the debt. He also cannot request more explanation than specified
in the statute. Shaver v. Trauner, 1998 U.S.Dist. LEXIS 19648 (C.D.Ill., July 1, 1998), adopting,
1998 U.S. Dist. LEXIS 19647 (C.D. Ill., May 29, 1998). Such a communication can be made only
once unless requested by that third party. If the consumer is represented by an attorney, the debt
collector may not communicate with any other person. Furthermore, if the collector already has
the permitted information, he should not be able to request it in order to harass the debtor. Id.

A. LEGAL ACTION BY DEBT COLLECTORS

A debt collector may bring an action to enforce an interest in real property only
where the real property is located. 15 U.S.C. §1692i(a)(1). This includes attorneys whose collection
activities are limited to purely legal activities, such as the filing of collection actions or mortgage
foreclosures. Shapiro & Meinhold v. Zartman, 823 P.2d 120 (Colo. 1992).

A collection action brought by a debt collector on a personal obligation may be

brought only in the "judicial district" where the consumer signed the contract or in which the
consumer resides at the time the action is filed. 15 U.S.C. §1692i(a)(2). Scott v. Jones, supra, 964
F.2d 314 (4th Cir. 1992); Dutton v. Wolhar, 809 F.Supp. 1130 (D.Del. 1992); Oglesby v. Rotche,
supra, 1993 WL 460841, 1993 U.S. Dist. LEXIS 15687 (N.D.Ill. 1993).

A. EXTRANEOUS MATERIAL ON ENVELOPES

Section 1692f(8) prohibits “Using any language or symbol, other than the debt
collector's address, on any envelope when communicating with a consumer by use of the mails or
by telegram, except that a debt collector may use his business name if such name does not indicate
that he is in the debt collection business.” Putting “U. S. Dept. of Education” on the return address
portion does not comply. Peter v. GC Services, LP, 310 F.3d 344 (5th Cir. 2002).

I. REMEDIES AND PROCEDURE

Federal and state courts have concurrent jurisdiction of FDCPA suits. 15 U.S.C.
§1692k(d).

A single violation is sufficient to support judgment for the consumer. Cacace v.

Lucas, 775 F.Supp. 502, 505 (D.Conn. 1990); Supan v. Medical Bureau of Economics, Inc., 785
F.Supp. 304, 305 (D.Conn. 1991).

A successful consumer is entitled to an award of actual damages, statutory damages

up to $1,000, costs and attorney's fees. 15 U.S.C. §1692k(a). Class action relief is also available.
15 U.S.C. §1692k(a)(2)(B).

In FDCPA litigation brought against the debt collector, the collector normally may
not assert a counterclaim for the underlying debt. Peterson v. United Accounts, Inc., 638 F.2d
1134 (8th Cir. 1981); Leatherwood v. Universal Business Service Co., 115 F.R.D. 48 (W.D.N.Y.

31
1987); Gutshall v. Bailey & Assoc., 1991 U.S.Dist. LEXIS 12153 (N.D.Ill. 1991); Venes v.
Professional Service Bureau, Inc., 353 N.W.2d 671 (Minn. App. 1984) (is permissive); Hart v.
Clayton-Parker & Assoc., 869 F. Supp. 774 (D.Ariz. 1994); Ayres v. National Credit Management
Corp., 1991 U.S. Dist. LEXIS 5629, 1991 WL 66845, at *4 (E.D. Pa. April 25, 1991); Zhang v.
Haven-Scott Assoc., Inc., 95-2126, 1996 WL 355344, 1996 U.S.Dist. LEXIS 8738 (E.D.Pa., June
21, 1996).

A. MOTION TO DISMISS/ SUMMARY JUDGMENT

_ Seventh Circuit
_
_ The Seventh Circuit has held that many issues as to whether debt collection notices
are misleading or confusing present questions of fact. In Johnson v. Revenue Management Corp.,
169 F.3d 1057 (7th Cir. 1999), the court held:
_
Rule 12(b)(6) should be employed only when the complaint does not present a legal
claim. A contention that a debt-collection notice is confusing is a recognized legal
claim; no more is needed to survive a motion under Rule 12(b)(6). See Bennett v.
Schmidt, 153 F.3d 516 (7th Cir. 1998). Such a claim may fail on the facts, but
assessing factual support for a suit is not the office of Rule 12(b)(6). Moreover, as
we observed in Bartlett, although many opinions inquire whether language in a
dunning letter "contradicts or overshadows" the statutory notice, these words are not
themselves the applicable rule of law; a court must inquire whether the letter is
confusing. 128 F.3d at 500-01. Language that contradicts or overshadows the
statutory notice may make a letter confusing, but to say that these are sufficient
means of showing confusion is not to say that they are necessary.

"A contradiction is just one means of inducing confusion; 'overshadowing' is

just another; and the most common is a third, the failure to explain an
apparent tho ugh not actual contradiction". Id. at 500 (emphasis in original). .
..

The two dispositions in the district court share an additional assumption: that
whether a dunning letter is "confusing" is a question to be answered solely by
applying the rules of logic to the text of the letter. But why should that be so? As we
noted in Bartlett, a letter may confuse even though it is not internally contradictory.
Unsophisticated readers may require more explanation than do federal judges; what
seems pellucid to a judge, a legally sophisticated reader, may be opaque to someone
whose formal education ended after sixth grade. To learn how an unsophisticated
reader reacts to a letter, the judge may need to receive evidence. A concurring
opinion in Gammon suggested that this evidence might include the kind of surveys
used to measure confusion in trademark cases. 27 F.3d at 1260.

Accord, Walker v. National Recovery, Inc., 200 F.3d 500, 503 (7th Cir. 1999); Marshall-Mosby v.
Corporate Receivables, Inc., 205 F.3d 323 (7th Cir. 2000).

On the other hand, some violations are so clear that summary judgment for the

32
plaintiff is proper. In Bartlett v. Heibl, 128 F.3d 497 (7th Cir. 1997), involving a threat to sue
within the validation period, the court reversed a judgment for the defendant entered after a bench
trial and ordered judgment for the plaintiff – the same test applies as is required to grant summary
judgment for the plaintiff. Chauncey v. JDR Recovery Corp., 118 F.3d 516 (7th Cir. 1997),
affirmed a summary judgment for plaintiff where the collection letter required action within 30 days
after its date, rather than after receipt.

Other decisions granting summary judgment for plaintiffs include Kort v.

Diversified Collection Syervices, 270 F.Supp.2d 1017 (N.D.Ill. 2003) (collection letter indicated
that administrative wage garnishment could begin during validation period).

A literally false statement in a collection document does not require proof of its
likelihood to mislead. Frye v. Bowman, Heintz, Boscia & Vician, P.C., 193 F.Supp.2d 1070 ,
1083-84 (S.D.Ind. 2002).

_ Elsewhere
_
_ Most other courts treat whether a collection letter is misleading as a question of law.
Russell v. Equifax A.R.S., 74 F.3d 30, 33 (2d Cir.1996); Valdez v. Hunt & Henriques,01-1712,
2002 WL 433595 (N.D.Cal. Mar 19, 2002) (“the Ninth Circuit has repeatedly held that whether a
collection letter would confuse the least sophisticated debtor is a question of law”).
_
_
B. DISCOVERY

Among the areas that have been held discoverable in FDCPA cases:

_ The source of a debt and the amount a bad debt buyer paid for plaintiff’s
debt. 213 (D.Conn. 1998); Coppola v. Arrow Financial Services, 302CV577, 2002 WL 32173704
(D.Conn., Oct. 29, 2002) (must phrase request clearly); Kimbro v. IC System, 301CV1676, 2002
WL 1816820 (D.Conn. July 22, 2002).
_
_ How amount sought was calculated. Coppola v. Arrow Financial Services,
302CV577, 2002 WL 32173704 (D.Conn., Oct. 29, 2002); Kimbro v. IC System, 301CV1676,
2002 WL 1816820 (D.Conn. July 22, 2002).
_
_ Where in issue, list of reports to credit bureaus. Coppola v. Arrow Financial
Services, 302CV577, 2002 WL 32173704 (D.Conn., Oct. 29, 2002).
_
_ Documents conferring authority on defendant to collect debt. Coppola v.
Arrow Financial Services, 302CV577, 2002 WL 32173704 (D.Conn., Oct. 29, 2002); Kimbro v. IC
System, 301CV1676, 2002 WL 1816820 (D.Conn. July 22, 2002); Yancey v. Hooten, 180 F.R.D.
203 (D.Conn. 1998).
_
_ Number of times offending collection letters were used. Yancey v. Hooten, 180
F.R.D. 203 (D.Conn. 1998).
_ In a class action, tax returns, financial statements. Mailloux v. Arrow

33
Financial Services, LLC, 01 CV 2000, 2002 WL 246771 (E.D.N.Y., Feb. 21, 2002).
_
_ With respect to class numbers and issues, see Gray v. First Winthrop Corp.,
133 F.R.D. 39 (C.D.Cal. 1990) ("[O]rder staying discovery pend ing class certification would be
unworkable, since plaintiffs must be able to develop facts in support of their class certification
motion"); Zahorik v. Cornell University, 98 F.R.D. 27 (N.D.N.Y. 1983) (discovery is often
necessary before plaintiffs can satisfy the requirements of Fed.R.Civ.P. 23(a)); Walker v. World
Tire Corp., Inc., 563 F.2d 918, 921 (8th Cir. 1977)(the propriety of class action status can seldom
be determined on the basis of pleadings alone, and parties must be offered the opportunity to
discover evidence on the issue.); McCray v. Standard Oil Co., 76 F.R.D. 490, 500 (N.D.Ill. 1976).
_
_ Proof of prior illegal acts is admissible to show knowledge and intent.
Joseph Taylor Coal Co. v. Dawes, 122 Ill.App. 389 (1905), aff'd. 220 Ill. 147, 77 N.E. 131 (1906);
_Edgar v. Fred Jones Lincoln- Mercury, 524 F.2d 162, 167 (10th Cir. 1975; Eaves v. Penn, 587 F.2d
453, 463-4 (10th Cir. 1978)(in civil action for breach of fiduciary duty, evidence of breaches of
fiduciary other than one for which recovery was sought properly admitted to show intent); Welch v.
Barnett, 34 Okla. 166 125 P. 472 (1912) (that five Indians willed property to the same unrelated
white men in different transactions is convincing proof that undue influence and fraud were
practiced on all); Barry v. Arrow Pontiac, Inc., 100 N.J. 57, 494 A.2d 804, 814 (1985).
_
_ Items which should generally be requested include:
_
All insurance policies that may afford coverage with respect to the matters
comp lained of, together with all correspondence accepting or declining coverage or
reserving rights with respect thereto.

Identify any testing done of defendant’s collection letters.

A. ACTUAL DAMAGES

A debt collector who has violated any provision of the FDCPA is liable for actual
damages. 15 U.S.C. §1692k(a)(1).

The amount of a valid debt does not constitute actual damages. Wiginton v. Pacific
Credit Corp., 2 Haw. App. 435, 634 P.2d 111, 118 (1981).

Actual damages include emotional distress. The debt collector may be held "liable
for any mental and emotional stress, embarrassment, and humiliation caused" by improper debt
collection activities. Kleczy v. First Federal Credit Control, Inc., 21 Ohio App.3d 56, 486 N.E.2d
204, 207 (1984); Venes v. Professional Service Bureau, Inc., 353 N.W.2d 671 (Minn. Ct. App.
1984); Baez-Martinez v. PMS, 1997 U.S. Dist. LEXIS 3314 (D.P.R. 1997); McGrady v. Nissan
Motor Accep. Corp., 40 F.Supp. 2d 1323 (M.D.Ala. 1998); Carrigan v. Central Adjustment
Bureau, 502 F.Supp. 468 (N.D. Ga. 1980); Rawlings v. Dovenmuehle Mtge, Inc., 64 F.Supp.2d
1156 (M.D.Ala. 1999). State law requirements regarding the proof of intentional or negligent
infliction of emotional distress are not applicable to actual damages under the FDCPA. Smith v.
Law Offices of Mitchell N. Kay, 124 B.R. 182, 185 (D.Del. 1991); Howze v. Romano, 92-644,
1994 WL 827162, 1994 U.S. Dist. LEXIS 20547 (D.Del. Dec. 9, 1994); Crossley v. Lieberman, 90

34
B.R. 682 (E.D.Pa. 1988), aff'd, 868 F.2d 566 (3d Cir. 1989); Teng v. Metropolitan Retail Recovery,
851 F.Supp. 61, 68-9 (E.D.N.Y. 1994); Donahue v. NFS, Inc., 781 F.Supp. 188, 193-4 (W.D.N.Y.
1991).

A. STATUTORY DAMAGES

In addition to actual damages, if any, the consumer may be awarded "such additional
damages as the court may allow, but not exceeding $1,000." 15 U.S.C. §1692k(a)(2). The
consumer need not show any actual damages in order to recover statutory damages. Bartlett v.
Heibl, supra; Baker v. G.C. Services Corp., 677 F.2d 775, 780-81 (9th Cir. 1982); Harvey v. United
Adjusters, supra, 509 F.Supp. 1218 (D.Or. 1981); Woolfolk v. Van Ru Credit Corp., 783 F.Supp.
724, 725 (D.Conn. 1990); Cacace v. Lucas, 775 F.Supp. 502 (D.Conn. 1990); Riveria v. MAB
Collections, Inc., 682 F.Supp. 174, 177 (W.D.N.Y. 1988); Kuhn v. Account Control Technol., 865
F.Supp. 1443, 1450 (D.Nev. 1994). It follows that where only statutory damages are claimed "any
FDCPA or related lawsuits filed in the past by this plaintiff have no bearing on whether the letter
sent by [the collector] violated the FDCPA" and are not discoverable. Lee v. Robins Preston
Beckett Taylor & Gugle Co., L.P.A., 1999 U.S. Dist. LEXIS 12969 (S.D. Ohio July 9, 1999).

In determining the amount of statutory damages in an individual action the court is

to consider "the frequency and persistence of non-compliance by the debt collector, the nature of
such non-compliance, and the extent to which the non-compliance was intentional". 15 U.S.C.
§1692k(b)(1). One court has held that continued use of an unlawful letter after being placed on
notice of its illegality warrants the maximum. Cacace v. Lucas, 775 F. Supp. 502, 507 (D. Conn.
1990). Others hold that the factor requires a court to consider whether the defendant “has a history
of violating the Act.” Blum v. Lawent, 02 C 5596, 2003 WL 22078306 (N.D.Ill., Sept. 8, 2003).
Accord, Evanauskas v. Strumpf, 300CV1106JCH, 2001 WL 777477 (D.Conn. June 27, 2001), *6;
Yancey v. Hooten, 180 F.R.D. 203 (D.Conn. 1998); Miller v. McCalla, Raymer, Padrick Cobb,
Nichols & Clark, LLC, 198 F.R.D. 503, 506 (N.D.Ill. 2001) (“The noncompliance here involved
thousands of individual violations over several years”); Creighton v. Emporia Credit Service, Inc.,
981 F.Supp. 411, 417 (E.D.Va. 1997) (lack of other complaints in 19 years collection agency was in
operation is favorable factor).

Similar language is used in NLRB cases. Power, Inc. v. NLRB, 40 F.3d 409, 422
(D.C.Cir. 1994).

On the other hand, some courts consider that in an individual action the conduct of
the debt collector towards third persons is not relevant. Cusumano v. NRB, Inc., 96 C 6876, 1998
WL 673833, 1998 U.S.Dist. LEXIS 15418 (N.D.Ill. Sept. 23, 1998); Powell v. Computer Credit,
Inc., 975 F.Supp. 1034, 1039 (S.D.Ohio 1997); Dewey v. Associated Collectors, Inc., 927 F.Supp.
1172, 1175 (W.D. Wis. 1996); Byes v. Credit Bureau Enterps., Inc., 1995 U.S. Dist. LEXIS 13559,
Civ. A No. 95-239, 1995 WL 540234, at *1 (E.D. La. Sept. 11, 1995). This appears to be wrong.
The only justification was offered by the court in Dewey, which stated that “number of persons
adversely affected” would be superfluous if “frequency and persistence of noncompliance” included
violations committed with respect to others. The short answer is that “number of persons adversely
affected” refers to the number of persons affected by one violation, whereas “frequency and
persistence of noncompliance” refers to the overall track record of the defendant.

35
 The Sixth Circuit, in Wright v. Finance Service of Norwalk, Inc., 22 F.3d 647 (6th
Cir. 1994) (en banc), the Fifth Circuit, in Peter v. GC Services, LP, 310 F.3d 344, 352 n. 5 (5th Cir.
2002); and the Eleventh Circuit, in Harper v. Better Business Services, Inc., 961 F.2d 1561 (11th
Cir. 1992), have held that up to $1,000 in statutory damages is available to one plaintiff in one
lawsuit. A majority of the district courts to have considered the issue have reached the same
conclusion. White v. Bruck, 927 F.Supp. 1168, 1169 (W.D.Wisc. 1996); Barber v. National
Revenue Corp., 932 F. Supp. 1153, 1156 (W.D.Wisc. 1996); Dewey v. Associated Collectors, Inc.,
927 F.Supp.1172 (W.D.Wisc., 1996); Teng v. Metropolitan Retail Recovery, Inc., 851 F.Supp. 61,
69 (E.D.N.Y. 1994); Hutchinson v. Russian, 1992 U.S. Dist. LEXIS 18891 (D. Kan. Oct. 29, 1992);
Donahue v. NFS, Inc., 781 F.Supp. 188, 191 (W.D.N.Y. 1991); Ganske v. Checkrite, Ltd., 1997
U.S.Dist. LEXIS 4345 (W.D.Wisc., Jan. 6, 1997); Beattie v. D.M. Collections, Inc., 764 F.Supp.
925, 928 (D.Del. 1991); Harvey v. United Adjusters, 509 F.Supp. 1218, 1222 (D.Ore. 1981);
Raimondi v. McAllister & Assocs., 50 F.Supp. 2d 825, 828 (N.D. Ill. 1999); Sibersky v. Borah,
Goldstein, Altschuler & Schwartz, P.C., 242 F.Supp.2d 273, 277 (S.D.N.Y. 2002); Evanauskas v.
Strumpf, 300CV1106JCH, 2001 WL 777477 (D.Conn. June 27, 2001); In re Hart, 246 B.R. 709,
732 (Bankr. D. Mass. 2000); Spencer v. Hendersen-Webb, Inc., 81 F.Supp.2d 582, 594 (D.Md.
1999); Nielsen v. Dickerson, 98 C 5909, 1999 WL 350649 (N.D.Ill. May 20, 1999); Blum v.
Lawent, 02 C 5596, 2003 WL 22078306 (N.D.Ill., Sept. 8, 2003). However, since a separate
FDCPA action could be filed for each communication or other discrete act that violates the law, a
substantial argument can be made that "action" means "cause of action" in that sense. Kaschak v.
Raritan Valley Collection Agency, 88-3763, 1989 WL 255498 (D.N.J. May 23, 1989); Rabideau v.
Management Adjustment Bureau, 805 F.Supp. 1086, 1095 (W.D.N.Y. 1992).

Moreover, each collection agency and individuals associated with it are liable for a
separate $1000 maximum award. Ganske v. Checkrite Ltd., 1997 U.S. Dist. LEXIS 4345
(W.D.Wis. 1997).

The statutory damages must be assessed by a jury if a party timely demands a jury
trial. Kobs v. Arrow Service Bureau, Inc., 134 F.3d 893 (7th Cir. 1998). Accord, Vera v. Trans-
Continental Credit & Collection Corp., 98 Civ. 1866, 1999 WL 292623, 1999 U.S. Dist. LEXIS
3464 (S.D.N.Y. May 10, 1999); Sibley v. Fulton DeKalb Collection Serv., 677 F.2d 830, 834 (11th
Cir. 1982).

A. VICARIOUS LIABILITY

A collection agency which employs an attorney who violates the FDCPA can be
held liable for his actions. Fox v. Citicorp Credit Servs., Inc., 15 F.3d 1507, 1516 (9th Cir. 1994);
Martinez v. Albuquerque Collection Servs., 867 F. Supp. 1495, 1502 (D.N.M. 1994); Kimber v.
Federal Fin. Corp., 668 F. Supp. 1480, 1486 (M.D.Ala. 1987); Ditty v. Check Rite, Ltd., 973
F.Supp. 1320 (D.Utah 1997). See also Alger v. Ganick, O'Brien & Sarin 35 F.Supp. 2d 148 (D.
Mass. 1999); Farber v. NP Funding II L.P., 1997 U.S. Dist. LEXIS 21245, 1997 WL 913335 at *2-
3 & n.4 (E.D.N.Y. Dec. 9, 1997).

A collection agency is liable for the FDCPA violations of its emp loyees. West v.
Costen, 558 F. Supp. 564, 573 (W.D.Va. 1983). "[N]umerous courts utilize agency principles to
make a principal vicariously liable for the acts of his authorized or apparent agent under the

36
FDCPA". Alger v. Ganick, O'Brien & Sarin, 35 F.Supp. 2d 148, 153 (D.Mass. 1999); accord, Pettit
v. Retrieval Masters, 211 F.3d 1057, 1059 (7th Cir. 2000); Pollice v. National Tax Funding, L.P.,
225 F.3d 379, 404 (3d Cir. 2000); Flamm v. Sarner & Associates, 02-4302, 2002 WL 31618443
(E.D.Pa., Nov. 6, 2002); Piper v. Portnoff Law Associates, 274 F.Supp.2d 681, 689 (E.D.Pa. 2003);
Havens-Tobias v. Eagle, 127 F.Supp.2d 889, 898 (S.D.Ohio 2001); Campion v. Credit Bureau
Services, CS-99-0199-EFS, 2000 WL 33255504 (E.D.Wash. Sept. 20, 2000); In re Hart, 246 B.R.
709, 731 (Bankr. D.Mass. 2000); Mizrahi v. Network Recovery Services, Inc., 98-CV-4528, 1999
WL 33127737 (E.D.N.Y. Nov. 5, 1999); Caron v. Charles E. Maxwell, P.C., 48 F.Supp.2d 932
(D.Ariz. 1999); Randle v. GC Services, L.P., 25 F. Supp. 2d 849, 851 (N.D.Ill. 1998); Ditty v.
CheckRite, Limited, Inc., 973 F. Supp. 1320, 1333-1334 (D.Utah 1997); Farber v. NP Funding II
L.P., 1997 U.S. Dist. LEXIS 21245, 1997 WL 913335 *2-3 & n.4 (E.D.N.Y. Dec. 9, 1997);
Newman v. CheckRite California, Inc., 912 F. Supp. 1354, 1369-1372 (E.D.Cal. 1995); Taylor v.
CheckRite, Ltd, 627 F. Supp. 415, 416-417 (S.D. Ohio 1986); West v. Costen, 558 F. Supp. 564,
573 & n.2 (W.D.Va. 1983).

However, a creditor which does not (i) bring itself within the proviso in §1692a(6)
imposing liability for using a third party name or (ii) violate §1692j is not vicariously liable for the
FDCPA violations of its debt collector, on the ground that with those two exceptions the FDCPA
manifests Congressional intent to exclude creditors from its scope. Wadlington v. Credit
Acceptance Corp., 76 F.3d 103, 108 (6th Cir. 1996); Caron v. Maxwell, 48 F.Supp. 2d 932
(D.Ariz. 1999); Claussen v. Chase Manhattan Visa, 87-4146, 1989 WL 87996, 1989 U.S.Dist.
LEXIS 9076 (D.Kan. July 26, 1989); First Interstate Bank of Fort Collins, N.A. v. Soucie, 924 P.2d
1200 (Colo.App. 1996).

Vicarious liability against creditors may be available under state collection practices
laws, such as the Illinois Collection Agency Act. 225 ILCS 425/1 et seq. In Sherman v. Field
Clinic, 74 Ill.App.3d 21, 392 N.E.2d 154 (1st Dist. 1979), the court held that a complaint stated a
claim on the theory that a medical clinic hired a collection agency which, in the course of
employment, committed a practice made unlawful under the Collection Agency Act.

General partners of a debt collector organized as a partnership are liable. Bartlett v.

Heibl, supra, 128 F.3d 497, 499 (7th Cir. 1997); Peter v. GC Services, LP, 310 F.3d 344, 353 (5th
Cir. 2002); Pollice v. National Tax Funding, LP, 225 F.3d 379, 405 (3rd Cir. 2000); Randle v. G.C.
Services, LP, 25 F.Supp. 2d 849 (N.D.Ill. 1998), related proceedings, Roe v. Publishers Clearing
House, Inc., 39 F. Supp. 1099 (N.D. Ill. 1999), summ. judgment granted, Randle v. GC Servs. L.P.,
48 F.Supp. 2d 835 (N.D. Ill. 1999); Peters v. AT&T, 179 F.R.D. 564 (N.D.Ill. 1998).

A. ATTORNEY'S FEES

The successful consumer is entitled to an award of costs and reasonable attorney's

fees. 15 U.S.C. §1692k(a)(3).

Given the structure of the section, attorney's fees should not be construed as a special
or discretionary remedy; rather the Act mandates an award of attorney's fees as a
means of fulfilling Congress's intent that the Act should be enforced by debtors
acting as private attorneys general.

37
Graziano v Harrison, supra, 950 F.2d at 113.

The proper rate at which an attorney bringing an FDCPA case is to be compensated

is the rate which his or her services command in the marketplace, as established by billings or
awards in other cases, and it is not proper to have a special reduced rate in FDCPA cases because of
the nature of the case or the $1,000 limitation on actual dama ges. Tolentino v. Friedman, 46 F.3d
645 (7th Cir. 1995).

A. BONA FIDE ERROR DEFENSE

The FDCPA does provide an affirmative defense to debt collectors:

A debt collector may not be held liable in any action brought under this title if the
debt collector shows by a preponderance of the evidence that the violation was not
intentional and resulted from a bona fide error notwithstanding the maintenance of
procedures reasonably adapted to avoid any such error.

15 U.S.C. §1692k(c). The provision is somewhat similar, but not identical, to one found in the
Truth in Lending Act. 15 U.S.C. §1640.

It is uncertain whether a mistaken view of the law is not excused under 15 U.S.C.
§1692k(c). Federal courts have split on the issue. A majority hold that the defense is limited to
clerical errors and cannot protect mistakes of law. Picht v. Jon R. Hawks, Ltd., 236 F.3d 446, 451
(8th Cir.2001) (stating that bona fide error defense does not apply to mistakes of law); Hulshizer v.
Global Credit Servs., Inc., 728 F.2d 1037, 1038 (8th Cir.1984) (per curiam); Pipiles v. Credit
Bureau of Lockport, Inc., 886 F.2d 22, 27 (2d Cir.1989) (same); Baker v. G.C. Servs. Corp., 677
F.2d 775, 779 (9th Cir.1982) (mistake of law "insufficient by itself to support the bona fide error
defense"); Hartman v. Meridian Fin. Servs., Inc., 191 F.Supp.2d 1031, 1045-46 (W.D.Wis.2002)
(does not apply to mistakes of law and generally is limited to clerical mistakes); Arroyo v. Solomon
& Solomon, P.C., No. 99-CV- 8302, 2001 WL 984940, at *6 (E.D.N.Y. July 19, 2001) amended
and superseded by 2001 WL 1590520 (E.D.N.Y. Nov. 16, 2001) (does not apply to mistakes of law,
and collecting cases); Wilkerson v. Bowman, 200 F.R.D. 605, 608-09 (N.D.Ill.2001) (does not
apply to mistaken view of the obligations imposed by the FDCPA); Edwards v. McCormick, 136
F.Supp.2d 795, 800 (S.D.Ohio 2001) (limited to clerical errors); Spencer v. Hendersen- Webb,
Inc., 81 F.Supp.2d 582, 591 (D.Md.1999) (does not apply to mistakes of law and generally is
limited to clerical mistakes); Booth v. Collection Experts, Inc., 969 F.Supp. 1161, 1165
(E.D.Wis.1997) (same).

However, a growing minority of courts reach the contrary conclusion. Johnson v.

Riddle, 305 F.3d 1107, 1121-22 (10th Cir. 2002); Nielsen v. Dickerson, 307 F.3d 623 (7th Cir.
2002); Jenkins v. Heintz, 124 F.3d 824, 832 & n. 7, 833 (7th Cir.1997) (stating that bona fide error
defense not limited to clerical errors and can apply to mistakes of law); Nance v. Ulferts, 282
F.Supp.2d 912, 920 (N.D.Ind. 2003) (errors of law, if “reasonable”); Frye v. Bowman, Heintz,
Boscia & Vician, 193 F.Supp.2d 1070, 1085-86 (S.D.Ind.2002) (same); Filsinger v. Upton, Cohen,
& Slamowitz, No. 99-CV-1393, 2000 WL 198223, at *2 (N.D.N.Y. Feb. 18, 2000) (not limited to
clerical errors); Taylor v. Luper, Sheriff & Niedenthal Co., 74 F.Supp.2d 761, 765 (S.D.Ohio 1999)
(not limited to clerical errors and can apply to mistakes of law); Watkins v. Peterson Enters., Inc.,

38
57 F.Supp.2d 1102, 1107-08 (E.D.Wash.1999) (can apply to mistakes of law where the mistake
stemmed from an official interpretation of the law); Aronson v. Commercial Fin. Servs, Inc., No.
Civ.A. 96-2113, 1997 WL 1038818, at *5 (W.D.Pa. Dec.22, 1997) (not limited to clerical errors
and can apply to mistakes of law).

Furthermore, the maintenance of precautions designed to avoid errors is mandatory.

Where the debt collector "failed to provide any evidence that it maintained proper procedures to
avoid error", the bona fide error defense was held not to be available. Carrigan v. Central
Adjustment Bureau, Inc., 494 F.Supp. 824, 827 (N.D.Ga. 1980); Oglesby v. Rotche, supra, 1993
U.S. Dist. LEXIS 15687, 1993 WL 460841 (N.D.Ill., Nov. 4, 1993). The mere assertion by a
defendant that it tries to comply with the law is not enough. Dechert v. Cadle Co., IP 01-880-
C(B/G), 2003 WL 23008969 (S.D.Ind. Sep. 11, 2003).

A. PERSONAL JURISDICTION

Most courts have held that FDCPA litigation is appropriately filed within the district
where the consumer received the communication. Brink v. First Credit Resources, 57 F.Supp.2d
848
(D.Ariz. 1999); Pope v. Vogel, 97 C 1835, 1998 WL 111576, 1998 U.S. Dist. LEXIS 2868 (N.D.
Ill. March 5, 1998); Flanagan v. World Wide Adjustment Bureau, Inc., 1996 U.S.Dist. LEXIS 8257
(M.D.N.C., May 3, 1996); Vlasak v. Rapid Collection Sys., 962 F. Supp. 1096 (N.D.Ill. 1997);
Murphy v. Allen County Claims & Adjustments, 550 F.Supp. 128 (S.D.Ohio 1982); Lachman v.
Bank of Louisiana in New Orleans, 510 F.Supp. 753 (N.D.Ohio 1981); Russey v. Rankin, 837
F.Supp. 1103 (D.N.M. 1993); Lachman v. Bank of Louisiana, 510 F.Supp. 753, 758 (N.D.Ohio
1981); Sluys v. Hand, 831 F. Supp. 321, 325 (S.D.N.Y. 1993); Fava v. RRI, Inc. , 96 CV 629, 1997
WL 205336, 1997 U.S. Dist. LEXIS 5630 (N.D.N.Y. April 24, 1997); Brujis v. Shaw, 876 F. Supp.
975 (N.D.Ill. 1995); Bailey v. Clegg, Brush & Assocs., Inc., 1991 WL 143361 (N.D.Ga. 1991);
Stone v. Talan & Ktsanes, 91-244-FR, 1991 WL 134364, 1991 U.S. Dist. LEXIS 9632 (D.Ore. July
2, 1998), later opinion 1991 WL 226939, 1991 U.S. Dist. LEXIS 15599 (D. Or. Oct. 15, 1991);
Paradise v. Robinson & Hoover, 883 F. Supp. 521 (D.Nev. 1995). There is one case to the
contrary: Krambeer v. Eisenberg, 923 F.Supp. 1170 (D.Minn. 1996).

A. CLASS ACTIONS

The FDCPA contains special damage provisions for class actions. 15 U.S.C.
§1692k. Recovery of statutory damages for the class is limited to 1% of the debt collector's net
worth or $500,000, whichever is less. The named plaintiffs, however, can collect their full statutory
damages. The damage limitation does not apply to actual damages.

“Net worth" means accounting book value. Sanders v. Jackson, 209 F.3d 998 (7th
Cir. 2000).

FDCPA actions based on improper form letters or charges, or similar standard

practices, are ideally suited for class action treatment. Under the objective "least sophisticated
consumer" or "unsophisticated consumer" standard of liability, an FDCPA claim for statutory
damages presents no issues of reliance or causation. "The question is not whether the plaintiffs were
deceived or misled, but rather whether an unsophisticated consumer would have been misled."

39
Beattie v. D.M. Collections, Inc., 754 F.Supp. 383, 392 (D.Del. 1991); see also, Stewart v.
Slaughter, 165 F.R.D. 696 (M.D.Ga. 1996). An FDCPA class action alleging unauthorized charges
may technically require proof of causation, but the payment of the unauthorized amount establishes
causation.

Class actions have been certified under the FDCPA in cases involving:

_ Phony attorney letters, Avila v. Rubin, supra; Stewart v. Slaughter, 165

F.R.D. 696 (M.D.Ga. 1996);
_
_ "Flat-rating", Arellano v. Etan Industries, Inc., supra, 1998 U.S. Dist. LEXIS
11352 (N.D. Ill., July 16, 1998); Davis v. Suran, 98 C 656, 1998 WL 474105, 1998 U.S. Dist.
LEXIS 12233 (N.D.Ill. Aug. 3, 1998);
_
_ Unauthorized charges, West v. Costen, 558 F.Supp. 564 (W.D.Va. 1983);
Duran v. Credit Bureau of Yuma, Inc., 93 F.R.D. 607 (D.Ariz. 1982); Keele v. Wexler, 1996 U.S.
Dist. LEXIS 3253, 1996 WL 124452, *6 (N.D.Ill. 1996), aff'd, 149 F.3d 589 (7th Cir. 1998); Ditty
v. CheckRite, Ltd., 182 F.R.D. 639 (D. Utah, 1998), later opinion, 1998 U.S.Dist. LEXIS 12940
(D.Utah, Aug. 13, 1998); Pikes v Riddle, 38 F.Supp. 2d 639 (N.D.Ill. 1998); Francisco v. Doctors
& Merchants Credit Service, Inc., 98 C 716, 1998 WL 474107, 1998 U.S. Dist. LEXIS 12234 (N.D.
Ill., July 29, 1998); Cheqnet Systems, Inc. v. Montgomery, 322 Ark. 742, 911 S.W.2d 956 (1995)
(class certified in FDCPA action challenging bad check charges).
_
_ Improper form letters, West v. Costen, 558 F.Supp. 564, 572-573 (W.D.Va.
1983) (FDCPA class certified regarding alleged failure to provide required "validation" notices);
Brewer v. Friedman, 152 F.R.D. 142 (N.D.Ill. 1993) (FDCPA class certified regarding transmission
of misleading collection demands to consumers), earlier opinion, 833 F.Supp. 697 (N.D.Ill. 1993);
Vaughn v. CSC Credit Services, 93 C 4151, 1994 WL 449247, 1994 U.S. Dist. LEXIS 2172, *24
(N.D. Ill. March 1, 1994) (Magistrate Judge's opinion), adopted, 1995 WL 51402, 1995 U.S. Dist.
LEXIS 1358 (N.D. Ill. Feb. 3, 1995); Beasley v. Blatt, 93 C 4987, 1994 WL 362185, 1994
U.S.Dist. LEXIS 9383 (N.D.Ill., July 11, 1994) (letters threatening action which was not intended
to be taken and could not legally be taken); Carr v. Trans Union Corp., 94-22, 1995 WL 20865,
1995 U.S. Dist. LEXIS 567 (E.D.Pa. Jan. 12, 1995); Colbert v. Trans Union Corp., 93-6106, 1995
WL 20821, 1995 U.S. Dist. LEXIS 578 (E.D.Pa. Jan. 12, 1995); Villareal v. Snow, 95 C 2484,
1996 WL 28254, 1996 WL 28282, 1996 U.S. Dist. LEXIS 667, *6 (N.D.Ill. Jan. 19, 1996); Peters
v. AT&T Corp., 179 F.R.D. 564 (N.D. Ill. 1998); Arango v. GC Services LP, 97 C 7912, 1998 WL
325257, 1998 U.S. Dist. LEXIS 9124 (N.D.Ill. June 11, 1998); Arellano v. Etan Industries, Inc., 97
C 8512, 1998 WL 417599, 1998 U.S. Dist. LEXIS 11352 (N.D. Ill., July 20, 1998); Wells v.
McDonough, 97 C 3288, 1998 WL 160876, 1998 U.S. Dist. LEXIS 4441 (N.D. Ill., March 31,
1998); Miller v. Wexler & Wexler, 97 C 6593, 1998 WL 60798, 1998 U.S. Dist. LEXIS 1382
(N.D. Ill., Feb. 6, 1998); Shaver v. Trauner, 1998 U.S. Dist. LEXIS 19698 (C.D. Ill., July 31,
1998); Wilborn v Dun & Bradstreet, 180 F.R.D. 347 (N.D.Ill. 1998).
_
_ Filing of suits in improper venues, Zanni v. Lippold, 119 F.R.D. 32, 35
(C.D.Ill. 1988); Holloway v. Pekay, 94 C 3418, 1995 U.S. Dist. LEXIS 18331, 1995 WL 736925
(N.D.Ill. 1995).
_

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_ The class may be defined in any manner that results in a cohesive group of claimants
with similar characteristics. In Mace v. Van Ru Credit Corp., 109 F.3d 338 (7th Cir., 1997). the
Seventh Circuit rejected the notion that the court is obligated to define the class as broadly as
possible:
_
[O]ur only task on appeal is to determine whether the FDCPA authorizes statewide
(in contrast to nation-wide) class actions. We note first that we know of no authority
requiring the participation of the broadest possible class. On the contrary, the class
requirements found in the Federal Rules of Civil Procedure encourage rather specific
and limited classes. Fed. R. Civ. P. 23. The typicality and commonality requirements
of the Federal Rules ensure that only those plaintiffs or defendants who can advance
the same factual and legal arguments may be grouped together as a class. * * *

The defendants, however, advance a policy argument, from which the district court
constructed a requirement for a nation-wide class. The district court reasoned that, if
the damage cap of $ 500,000 can be applied anew to a series of state-wide (or
otherwise limited) class actions, the damage limitation would become meaningless.
This contention may be correct as far as it goes, although there is, of course, no way
of telling whether such repeated class actions are possible or likely, here or
generally. The other side of the coin is that to require a nation-wide class as the
district court did here brings with it other problems that will be discussed later.
There are other possible problems with the district court's reasoning. The FDCPA
has a short, one-year statute of limitations making multiple lawsuits more difficult.
Further, if a debt collector is sued in one state, but continues to violate the statute in
another, it ought to be possible to challenge such continuing violations. Given the
uncertainty of those policy considerations, there is no compelling reason to ignore
the plain words of the statute. In any event, the case before us does not now present
multiple or serial class actions to recover for the same misconduct. Hence, it would
be premature to require a nation-wide class at this juncture. If and when multiple
serial class actions are presented, it will be time enough to rule on such a pattern. At
this point, there is no persuasive reason to require a nation-wide class.

In a class action alleging that unauthorized charges were demanded, a plaintiff who
did not pay the charge may represent a class consisting of both people that did pay and people that
did not pay. Keele v. Wexler, 149 F.3d 589 (7th Cir. 1998).

A. LIMITATIONS

The one-year statute of limitations begins to run when a collection letter is mailed
or an improper lega l action is filed. Naas v. Stolman, 130 F.3d 892 (9th Cir. 1997); Maloy v.
Phillips, 64 F.3d 607, 608 (11th Cir. 1995); Mattson v. U.S. West Communications, 967 F.2d
259, 261 (8th Cir. 1992); Prade v. Jackson & Kelley, 941 F.Supp. 596, 599-600 (N.D. W. Va.
1996), aff'd mem. 135 F.3d 770 (4th Cir. 1998); Blakemore v. Pekay, 895 F.Supp. 972, 982-83
(N.D. Ill. 1995). The Eighth Circuit has held that the one year statutory limitation expires the day
before that anniversary date, Mattson v. U.S. West Communications, Inc., 967 F.2d 259 (8th
Cir. 1992), but all other circuits are contrary. Johnson v. Riddle, 305 F.3d 1107 (10th Cir. 2002);
United Mine Workers v. Dole, 870 F.2d 662, 665 (D.C.Cir.1989); Frey, 748 F.2d at 175.

41
A. OTHER DEFENSES

Nonstatutory defenses should not be recognized under the FDCPA. Generally,

when dealing with a statutory cause of action which enumerates defenses, it is not appropriate to
add to the list. People v. Theobald, 43 Ill.App.3d 897, 356 N.E.2d 1258 (3rd Dist. 1976). It is
particularly inappropriate to recognize the common law “voluntary payment” doctrine as a
defense to a statute which makes it unlawful to induce the payment of money through deceptive
or unfair practices. Scott v. Fairbanks Capital Corp., 284 F.Supp.2d 880 (S.D.Ohio 2003);
Harper v. American Tel. & Tel. Co., 54 F.Supp.2d 1371, 1380-81 (S.D.Ga. 1999) (state law
regarding voluntary payments cannot be used to prevent recovery of money obtained through
mail fraud). “When an enactment is clear and unambiguous a court is not at liberty to depart
from the plain language and meaning of the statute by reading into it exceptions, limitations or
conditions that the legislature did not express." Village of Bloomingdale v. CDG Enterprises,
Inc., 196 Ill.2d 484, 493, 752 N.E.2d 1090 (2001).

42
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